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NEW YORK v. MICROSOFT CORP.

November 1, 2002

STATE OF NEW YORK, ET AL., PLAINTIFFS
V.
MICROSOFT CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Kollar-kotelly, District Judge.

        MEMORANDUM OPINION

"There is a remedy for all things but death. . . ."*fn1

    INTRODUCTION

Presently pending before the Court are two dueling remedy proposals seeking to redress the wrongs inflicted upon competition by Defendant Microsoft Corporation. These proposals were presented to this Court following the district court's determination of liability for violation of the Sherman Act, a partial affirmance by the United States Court of Appeals for the District of Columbia Circuit, and an order of remand by the appellate court accompanied by instructions to impose a remedy. Upon review of the entire factual record in this case, the determinations of liability affirmed by the D.C. Circuit, the parties' legal memoranda, and the relevant legal authority, the Court enters the following legal and discretionary conclusions and order of remedy. The Court bases such conclusions and remedy upon its findings of fact, entered below and in Appendix A.

I. PROCEDURAL HISTORY

On May 18, 1998, simultaneous with the filing of a complaint by the United States in a related case, a group of state plaintiffs filed a civil complaint alleging antitrust violations by Microsoft and seeking preliminary and permanent injunctions barring the company's allegedly unlawful conduct.*fn2 See Microsoft, 253 F.3d at 47. In United States v. Microsoft Corp., No. 98-1232 (D.C.), the federal government brought claims pursuant to federal law, while in State of New York, et al. v. Microsoft Corp., No. 98-1233 (D.C.), the Plaintiff States*fn3 brought claims pursuant to both federal and state law. These two cases were consolidated, and following a bench trial in the consolidated cases, Judge Thomas Penfield Jackson concluded that Microsoft had violated §§ 1 and 2 of the Sherman Act, 15 U.S.C. § 1, 2, imposing liability for illegal monopoly maintenance, attempted monopolization, and unlawful tying. United States v. Microsoft Corp., 87 F. Supp.2d 30, 35 (D.C. 2000). Correspondingly, Judge Jackson held that Microsoft had violated the state antitrust laws analogous to §§ 1 and 2 of the Sherman Act in each of the nineteen plaintiff states and the District of Columbia.*fn4 Id. at 54. To remedy these findings of liability, Judge Jackson ordered the division of Microsoft into two separate corporations. United States v. Microsoft Corp., 97 F. Supp.2d 59, 64 (D.C. 2000). Microsoft filed an appeal in both cases. On appeal, the D.C. Circuit deferred to Judge Jackson's factual findings, Microsoft, 253 F.3d at 118, altered his findings of liability-affirming in part and reversing in part, and vacated the remedy decree, id. at 46.

The appellate court remanded the cases to this Court with instructions to hold a "remedies-specific evidentiary hearing," id. at 103, and to "fashion an appropriate remedy" in light of the revised liability findings, id. at 105. Following remand, pursuant to Court Order, the parties in the two consolidated cases entered into intensive settlement negotiations. See United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (D.C. Sept. 28, 2001) (order requiring the parties to enter into settlement negotiations). The settlement negotiations did not resolve both cases in their entirety. However, the United States and Microsoft were able to reach a resolution in United States v. Microsoft Corp. in the form of a proposed consent decree. The settlement negotiations were partially successful with regard to the states' case, State of New York, et al. v. Microsoft Corp.; a portion of the plaintiffs in that case joined the settlement between the United States and Microsoft.*fn5 Consequently, those states have elected not to proceed to a remedies-specific hearing in State of New York, et al. v. Microsoft Corp. The states which opted not to join the settlement between the United States and Microsoft have proposed a remedy distinct from that presented in the proposed consent decree.

Following expedited discovery, on March 18, 2002, an evidentiary hearing on the issue of the remedy commenced. The parties submitted the direct testimony in written format, while cross-examination and re-direct testimony were offered in open court. Over thirty-two trial days, the Court reviewed the written direct testimony and heard the live testimony of fifteen witnesses proffered by Plaintiffs*fn6 and nineteen*fn7 witnesses proffered by Microsoft.*fn8 Of these witnesses, Plaintiffs offered expert testimony from Dr. Andrew Appel, Professor of Computer Science at Princeton University, whom the Court qualified as an expert in the field of computer science and software engineering. Plaintiffs' only other expert was Dr. Carl Shapiro, Professor of Business Strategy at the University of California at Berkeley. The Court qualified Dr. Shapiro as an expert in the field of economics. Microsoft presented expert testimony from Dr. John Bennett, a professor in the Department of Computer Science and Electrical Computer Engineering at the University of Colorado at Boulder, and Dr. Stuart Madnick, Professor of Information Technology at the Sloan School of Management and Professor of Engineering Systems in the Engineering Division of the Massachusetts Institute of Technology's School of Engineering. Both Drs. Madnick and Bennett were qualified by the Court as experts in the field of computer science. Microsoft also offered the expert testimony of Dr. Kenneth Elzinga, Professor of Economics at the University of Virginia, and of Dr. Kevin Murphy, Professor of Business Economics in the Graduate School of Business at the University of Chicago. The Court qualified Drs. Elzinga and Murphy as experts in the field of economics.

At the outset of this phase of the proceeding, both parties proposed to offer expert testimony on the subject of decree enforcement from "legal experts." In response to a request by Microsoft to exclude such testimony, see generally "Defendant Microsoft Corporation's Motion in Limine to Exclude the Expert Report of John H. Shenefield Which Improperly Proffers a Legal Conclusion," the Court raised a concern that the expert legal testimony, at least as framed by the parties, was improper. The Court also expressed the opinion that the "expert legal testimony" would be presented more appropriately by the attorneys in the form of oral argument. In response to the Court's concern, the parties voluntarily withdrew their presentation of these expert witnesses and opted instead to present the information to the Court in the form of legal briefs and argument. See Trial Transcript ("Tr."). at 1633-40, 1835-40.

II. LAW OF THE CASE

When issues have been resolved at a prior stage in the litigation, based upon principles of judicial economy, courts generally decline to revisit resolved issues. More than a mere rule-of-thumb, the "`[1]aw of the case doctrine' refers to a family of rules embodying the general concept that a court involved in later phases of a lawsuit should not re-open questions decided (i.e., established as the law of the case) by that court or a higher one in earlier phases." Crocker v. Piedmont Aviation, Inc., 49 F.3d 735, 739 (D.C.Cir. 1995). Similar to the law of the case doctrine is the "mandate rule," a "`more powerful version' of the law-of-the-case doctrine, which prevents courts from reconsidering issues that have already been decided in the same case." Independent Petroleum Ass'n of Am. v. Babbitt, 235 F.3d 588, 597 (D.C.Cir. 2001) (quoting LaShawn A. v. Barry, 87 F.3d 1389, 1393 n. 3 (D.C.Cir. 1996) ("[A]n even more powerful version of the [law-of-the-case] doctrine — sometimes called the `mandate rule' — requires a lower court to honor the decisions of a superior court in the same judicial system.")). "Under the mandate rule, `an inferior court has no power or authority to deviate from the mandate issued by an appellate court.'" Id. (quoting Briggs v. Pennsylvania R.R. Co., 334 U.S. 304, 306, 68 S.Ct. 1039, 92 L.Ed. 1403 (1948)).

In this case, the mandate of the appellate court requires this Court to fashion a remedy appropriately tailored to the revised liability findings. Microsoft, 253 F.3d at 105. Not surprisingly then, the starting place for this Court's determination of an appropriate remedy is the appellate opinion in this case. As the sole issue remaining in the case concerns a remedy for Microsoft's violation of § 2 of the Sherman Act, rather than a reassessment of liability, the relevant portions of the appellate opinion consist of that court's discussion of § 2 liability. For background purposes, the Court shall summarize the pertinent portions of the appellate decision, placing the primary focus upon the appellate court's determination of § 2 liability.

A. Court of Appeals Opinion

1. Market Definition

The appellate court began its opinion by examining Plaintiffs'*fn9 § 2 Sherman Act claims and, specifically, whether the district judge had identified the proper market for purposes of assessing Microsoft's monopoly power. The appellate court concluded that the district court had properly defined the relevant market as "the licensing of all Intel-compatible PC*fn10 operating systems*fn11 worldwide." Microsoft, 253 F.3d at 52 (quoting Microsoft, 87 F. Supp.2d at 36). Having agreed with the district court's definition of the relevant market, the appellate court adopted the district court's determination that "circumstantial evidence proves that Microsoft possesses monopoly power." Id. at 56. The appellate court further noted that "if we were to require direct proof [of monopoly power], . . . Microsoft's behavior may well be sufficient to show the existence of monopoly power." Id. at 57.

2. Theory of Liability

Integral to the appellate court's adoption of the market definition was its simultaneous acceptance of Plaintiffs' theory of Microsoft's market dominance. Both the district and appellate courts noted that Microsoft's lawfully-acquired monopoly is naturally protected by a "structural barrier," known as the "applications barrier to entry." Id. at 55. "That barrier . . . stems from two characteristics of the software market: (1) most consumers prefer operating systems for which a large number of applications have already been written; and (2) most developers prefer to write for operating systems that already have a substantial consumer base." Id. (citing Findings of Fact ¶¶ 30, 36). This barrier creates a "chicken-and-egg" or network effects situation, which perpetuates Microsoft's operating system dominance because "applications will continue to be written for the already dominant Windows,*fn12 which in turn ensures that consumers will continue to prefer it over other operating systems." Id. Because "[e]very operating system has different APIs,"*fn13 applications written for one operating system will not function on another operating system unless the developer undertakes the "time consuming and expensive" process of transferring and adapting, known in the industry as "porting," the application to the alternative operating system. Id. at 53.

Plaintiffs proceeded under the theory that certain kinds of software products, termed "middleware,"*fn14 could reduce the "self-reinforcing cycle," Findings of Fact ¶ 39, by serving as a platform for applications, taking over some of the platform functions provided by Windows and thereby "weaken[ing] the applications barrier to entry," id. ¶ 68. One of middleware's defining characteristics as a software product is its ability to "expos[e] its own APIs." Findings of Fact ¶ 28. Eventually, reasoned Plaintiffs, if applications were written to rely on the middleware API set, rather than the Windows API set, the applications could be made to run on alternative operating systems simply by porting the middleware. Ultimately, by writing to the middleware API set, applications developers could write applications which would run on any operating system on which the middleware was preset. Plaintiffs focused their attention primarily upon two such middleware threats to Microsoft's operating system dominance-Netscape Navigator*fn15 and the Java technologies. See Microsoft, 253 F.3d at 53. The district and appellate courts accepted Plaintiffs' theory of competition despite the fact that "neither Navigator, Java, nor any other middleware product could [at that time], or would soon, expose enough APIs to serve as a platform for popular applications." Id.; Findings of Fact ¶¶ 28-29.

3. Four-Part Test for Liability

Having concluded that the district court properly identified the relevant market as the market for Intel-compatible PC operating systems and properly excluded middleware products from that market, the appellate court turned its attention to the issue of whether Microsoft responded to the threat posed by middleware in violation of § 2 of the Sherman Act. Specifically, the appellate court set out to determine whether Microsoft "maintain[ed], or attempt[ed] to . . . maintain, a monopoly by engaging in exclusionary conduct." Microsoft, 253 F.3d at 58. The appellate court recounted that the district court answered that inquiry in the affirmative, finding Microsoft liable for violating § 2 of the Sherman Act:

by engaging in a variety of exclusionary acts . . . [s]pecifically . . .: (1) the way in which it integrated [Internet Explorer] into Windows; (2) its various dealings with Original Equipment Manufacturers ("OEMs"), Internet Access Providers ("IAPs"), Internet Content Providers ("ICPs"), Independent Software Vendors (ISVs), and Apple Computer; (3) its efforts to contain and to subvert Java technologies; and (4) its course of conduct as a whole.

Id. In order to review the district court's findings on this point, the appellate court outlined a four-part test for determining whether particular conduct can be said to violate antitrust law. "First, to be condemned as exclusionary, a monopolist's act must have an `anticompetitive effect.' That is, it must harm the competitive process and thereby harm consumers." Id. at 58 (emphasis in original). Second, the plaintiff must "demonstrate that the monopolist's conduct harmed competition, not just a competitor." Id. at 59. Third, "the monopolist may proffer a `procompetitive justification' for its conduct." Id. (quoting Eastman Kodak Co. v. Image Technical Servs. Inc., 504 U.S. 451, 483, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992)). If this justification stands unrebutted by the plaintiff, the monopolist may escape liability. Therefore, the fourth prong of the inquiry requires that the plaintiff "demonstrate that the anticompetitive harm of the conduct outweighs the procompetitive benefit." Id. The appellate court stressed that, although evidence of intent is relevant "to understand the likely effect of the monopolist's conduct," when assessing the balance between the anticompetitive harm and the procompetitive effect, the trial court should focus on the "effect of [the exclusionary] conduct, not the intent behind it." Id.

Using this framework, the appellate court addressed Microsoft's challenge to each of the findings by the district court. The appellate court examined the district court's four basic areas of findings with regard to § 2 liability in an order different from that of the district court. The Court presents these holdings, in the order addressed by the appellate court.

4. Original Equipment Manufacturer ("OEM") Licenses

Commencing its analysis with the "[l]icenses [i]ssued to [o]riginal [e]quipment [m]anufacturers,"*fn16 id. at 59, the appellate court focused upon three license provisions "prohibiting the OEMs from: removing any desktop icons, folders, or `Start' menu entries; (2) altering the initial boot sequence; and (3) otherwise altering the appearance of the Windows desktop," id. at 61 (citing Findings of Fact ¶ 213). Into the category of "otherwise altering the appearance of the Windows desktop," the appellate court subsumed the automatic launch of an alternative user interface, the prohibition against the addition of icons and folders different in size and shape from those used by Microsoft, and the prohibition against the use of the "Active Desktop" feature*fn17 to display third-party brands. Id, at 62; see also Findings of Fact ¶ 213. Of these license provisions, the appellate court concluded that, "with the exception of the one restriction prohibiting automatically launched alternative interfaces, all of the OEM license restrictions at issue represent uses of Microsoft's market power to protect its monopoly, unredeemed by any legitimate justification." Id. at 64. In commencing its next area of analysis, the appellate court noted with regard to the license restrictions imposed upon OEMs that they "have a significant effect in closing rival browsers out of one of the two primary channels of distribution." Id.

5. Integration of Internet Explorer ("IE") and Windows

The appellate court next turned its attention toward the "[i]ntegration of [Internet Explorer ("IE")]*fn18 and Windows." Id. At the outset of its analysis, the appellate court took a narrow view of the district court's determination, noting that the district court's "broad[]" condemnation of "Microsoft's decision to bind `Internet Explorer to Windows with . . . technological shackles'" is supported by only three specific actions taken by Microsoft. Id. (quoting Microsoft, 87 F. Supp.2d at 39). The appellate court identified these three as (1) "excluding IE from the `Add/Remove Programs' utility"; (2) "designing Windows so as in certain circumstances to override the user's choice of a default browser other than IE"; and (3) "commingling code related to browsing and other code in the same files, so that any attempt to delete the files containing IE would, at the same time, cripple the operating system." Id. at 64-65. Pursuant to Its four part test for liability, the appellate court concluded that Microsoft could be held liable for the first and the third of these actions. Id. at 65-67. As to the second of these actions, the override of the user's choice of default in certain circumstances, the court determined that Microsoft had proffered a procompetitive justification that went unrebutted by Plaintiffs, namely that the override was the result of "valid technical reasons" which justified the override in a "few out of the nearly 30 means of accessing the Internet." Id. at 67 (quotation marks omitted). Finding that Plaintiffs had neither rebutted Microsoft's procompetitive justification, nor demonstrated that the anticompetitive effect of the challenged act outweighed such justification, the appellate court held that "Microsoft may not be held liable for this aspect of its product design." Id.

6. Agreements with Internet Access Providers ("IAPs")

Directing its attention to Microsoft's "agreements with various IAPs,"*fn19 which the district court "condemned" as exclusionary, the appellate court identified five Microsoft actions specifically relied upon by the district court for this condemnation:

(1) offering IE free of charge to IAPs[;] . . . (2) offering IAPs a bounty for each customer the IAP signs up for service using the IE browser[;] . . . (3) developing the IE Access Kit ("IEAK"), a software package that allows an IAP to "create a distinctive identity for its service in as little as a few hours by customizing the [IE] title bar, icon, start and search pages," Findings of Fact ¶ 249[;] . . . (4) offering the IEAK to IAPs free of charge, on the ground that those acts, too, helped Microsoft preserve its monopoly[,] [Microsoft, 87 F. Supp.2d] at 41-42[;] . . . (5) agree[ing] to provide easy access to IAPs' services from the Windows desktop in return for the IAPs' agreement to promote IE exclusively and to keep shipments of internet access software using Navigator under a specific percentage, typically 25%. See [Microsoft, 87 F. Supp.2d] at 42 (citing Findings of Fact ¶¶ 258, 262, 289).

Id. at 67-68. Grouping the first four of these actions together as "Microsoft's inducements," the appellate court held that these four actions merely "offer[ed] a consumer an attractive deal" and, therefore, could not be treated as anticompetitive. Id. at 68. In contrast, the appellate court agreed with the district court that Microsoft's exclusive contracts with IAPs "are exclusionary devices, in violation of § 2 of the Sherman Act." Id. at 71.

7. Agreements with Internet Content Providers ("ICPs"), Independent Software Vendors ("ISVs"), and Apple

The appellate court next considered Microsoft's "dealings with ICPs, which develop websites; ISVs, which develop software; and Apple, which is both an OEM and a software developer." Id at 71. The "deals" at issue in this portion of the case are grants of "free licenses to bundle IE with [the ICPs' and ISVs'] offerings" and the exchange of "other valuable inducements for [ICPs' and ISVs'] agreement to distribute, promote, and rely on IE rather than Navigator." Id. (quoting Microsoft, 87 F. Supp.2d at 42-43) (brackets and quotation marks omitted). The district court held these agreements to be anticompetitive in violation of § 2 of the Sherman Act because they had the effect of "directly induc[ing] developers to focus on [Microsoft's] own APIs rather than ones exposed by Navigator." Id. (quoting Microsoft, 87 F. Supp.2d at 42-43) (quotation marks omitted).

At the outset of its analysis in this context, the appellate court concluded bluntly that "[w]ith respect to [Microsoft's] deals with ICPs, the District Court's findings do not support liability." Id. In contrast, the appellate court sustained the district court's finding of liability with regard to Microsoft's agreements with ISVs because Plaintiffs made "a prima facie showing that the deals have an anticompetitive effect," and Defendant did not successfully rebut this showing. Id. at 72. In particular, the appellate court found that the exclusive provisions in these so-called "First Wave Agreements" with ISVs foreclosed a substantial share of the market for Navigator. Id.

Turning its attention in this context finally to Microsoft's relationship with Apple, the appellate court concluded that Microsoft's agreement with Apple was exclusionary in violation of § 2 of the Sherman Act. Id. at 72-74. The appellate court recounted that in mid-1997, Microsoft and Apple entered into an agreement which obligated Microsoft to continue to release "up-to-date" versions of its office productivity software for Apple's systems, Mac Office. Id. at 73 (citing Findings of Fact ¶¶ 350-52). The agreement further obligated Apple to make IE the default browser. Id. (citing Findings of Fact ¶¶ 350-52). Pursuant to this same agreement, Apple promised not to install Navigator during the "default installation," and not to "position icons for non[-]Microsoft browsing software on the desktop of new Macintosh PC systems or Mac OS upgrades." Id. (quoting Findings of Fact ¶¶ 350-52). Similarly, the agreement prohibited Apple "from encouraging users to substitute another browser for IE, and state[d] that Apple [would] `encourage its employees to use [E.'" Id. (quoting Findings of Fact ¶ 352) (brackets omitted). The appellate court concluded that "[t]his exclusive deal between Microsoft and Apple ha[d] a substantial effect upon the distribution of rival browsers." Id. Given the absence of a "procompetitive justification for the exclusive dealing arrangement," the appellate court affirmed the district court's finding of § 2 liability based upon Microsoft's exclusive deal with Apple. Id. at 74.

8. Java

The appellate court grouped the next category of Microsoft conduct under the heading "Java" in reference to "a set of technologies developed by Sun Microsystems" ("Sun"). Id. The Java technologies are described as "another type of middleware posing a potential threat to Windows' position as the ubiquitous platform for software development." Id. (citing Findings of Fact ¶ 28). The appellate opinion recounts that the district court identified four steps taken by Microsoft to "exclude Java from developing as a viable cross-platform threat: (a) designing a [Java Virtual Machine ("JVM")*fn20] incompatible with the one developed by Sun; (b) entering into contracts, the so-called `First Wave Agreements,' requiring major ISVs to promote Microsoft's JVM exclusively; (c) deceiving Java developers about the Windows-specific nature of the tools it distributed to them; and (d) coercing Intel to stop aiding Sun in improving the Java technologies." Id. Of these actions, the appellate court concluded that all but the first action were anticompetitive in violation of § 2. Id. at 74-78. With regard to the first enumerated action, the incompatible JVM, the appellate court held that because the incompatible JVM did not have an anticompetitive effect which outweighed the procompetitive justification for the design, it could not provide a basis for antitrust liability. Id. at 75.

Specifically, with regard to the First Wave Agreements, the appellate court observed that the district court had found the agreements, "although not literally exclusive . . . were exclusive in practice." Id. at 75. Although the district court did not enter precise findings as to the effect of the First Wave Agreements upon rival Java distribution, the appellate court determined that "the record indicates that Microsoft's deals with the major ISVs had a significant effect upon JVM promotion." Id. In the absence of procompetitive justification, the appellate court imposed liability for this aspect of the First Wave Agreements. Id. at 76.

As to the Java developer tools, the appellate court's imposition of liability focused not upon the fact that the tools created programs which were not cross-platform, but upon the fact that Microsoft deceived software developers about the Windows-specific nature of the tools. Id. at 76-77. The appellate court found that Microsoft's deception was intentional and without procompetitive explanation. Id. at 77. As a result, the appellate court imposed liability for Microsoft's deception. Id.

9. Intel

As noted above, the appellate court's final imposition of liability arose out of a "threat" by Microsoft directed at Intel. Id. at 77. "Intel is [a firm] engaged principally in the design and manufacture of microprocessors." Findings of Fact ¶ 95. A segment of Intel's business develops software, with the primary focus upon "finding useful ways to consume more microprocessor cycles, thereby stimulating demand for advanced Intel microprocessors." Id. The appellate court recounted that in 1995, Intel was in the process of "developing a high performance, Windows-compatible JVM." Microsoft, 253 F.3d at 77. Furthering its efforts to combat the cross-platform threat of Java to the Windows platform, Microsoft repeatedly "urged Intel not to help Sun by distributing Intel's fast, Sun compliant JVM." Id. Eventually, Microsoft "threatened Intel that if it did not stop aiding Sun . . . then Microsoft would refuse to distribute Intel technologies bundled with Windows." Id. Intel capitulated after Microsoft threatened to support an Intel competitor, AMD, if Intel's efforts with Java continued. Id.

The appellate court acknowledged Microsoft's anticompetitive intent, as well as the anticompetitive effect of Microsoft's actions toward Intel. Id. Microsoft did not offer a procompetitive justification for its treatment of Intel, but "lamely characterize[d] its threat to Intel as `advice.'" Id. Rejecting the characterization of Microsoft's threat as mere "advice," the appellate court found the district court's imposition of liability to be supported by both fact and law. Id. at 77-78. On this basis, the appellate court imposed § 2 liability for Microsoft's threat to Intel.

Corresponding to the above-described imposition of liability pursuant to § 2 of the Sherman Act, the appellate court imposed liability upon Microsoft for violations of the relevant "state law counterparts of" the Sherman Act. Id. at 46. Beyond these findings, the appellate court did not find Microsoft liable for any additional antitrust violations. Specifically, the appellate court reversed the district court's conclusion that Microsoft's "course of conduct" as a whole constitutes a separate violation of 2. Id. at 78. In addition, the appellate court rejected the district court's finding of attempted monopolization and remanded the § 1 tying claim for further proceedings at the district court level.*fn21 Plaintiffs opted not to pursue the tying claim on remand. 22 Joint Status Report (Sept. 20, 2001) at 2.

10. Vacating the District Court's Order of Remedy

Following its review of the district court's conclusions with regard to liability, the appellate court considered the district court's choice of remedy. Over the objection of Defendant Microsoft, the district court decided to consider the merits of Plaintiffs' remedy proposal in the absence of an evidentiary hearing. Microsoft, 253 F.3d at 98-99; see also Microsoft, 97 F. Supp.2d at 61. The district court did so based on the rationale that Microsoft's evidentiary proffers largely concerned "testimonial predictions about future events" which would be of little use to the court in identifying an "optimum remedy." Microsoft, 253 F.3d at 99 (quoting Microsoft, 97 F. Supp.2d at 62). Based upon its finding of liability for illegal monopoly maintenance, attempted monopolization, and illegal tying, the district court entered a remedy "nearly identical to plaintiffs' proposal" mandating the divestiture of Microsoft Corporation into an "Operating Systems Business" and an "Applications Business." Id. at 99-100 (quoting Microsoft, 97 F. Supp.2d at 64). The original decree entered by the district court, often referred to as the Initial Final Judgment ("IFJ"), also included a number of "interim restrictions on Microsoft's conduct." Id. at 100. The interim restrictions included, inter alia, mandatory disclosure "to third-party developers the APIs and other technical information necessary to ensure that software effectively interoperates with Windows," id. (describing IFJ § 3.b), a prohibition on Microsoft's ability to enter into contracts which oblige third parties to limit their "`development, production, distribution, promotion, or use of, or payment for' nonMicrosoft platform-level software," id. (quoting IFJ § 3.e), and a "`Restriction on Binding Middleware Products to Operating System Products' unless Microsoft also offers consumers `an otherwise identical version' of the operating system without the middleware," id. (quoting IFJ § 3.g).

The appellate court found three fundamental flaws in the district court's order of remedy, each of which alone justified vacating the remedial decree. The appellate court first concluded that the failure to hold an evidentiary hearing in the face of disputed facts concerning the remedy violated the "cardinal principle of our system of justice that factual disputes must be heard in an open court and resolved through trial-like evidentiary proceedings." Id. at 101. The appellate court rejected the district court's conclusion that evidentiary proceedings would not be useful, noting that "a prediction about future events is not, as a prediction, any less a factual issue." Id. at 102. Moreover, noted the appellate court, "drafting an antitrust decree by necessity `involves predictions and assumption concerning future economic and business events.'" Id. (quoting Ford Motor Co. v. United States, 405 U.S. 562, 578, 92 S.Ct. 1142, 31 L.Ed.2d 492 (1972)).

In addition to the failure to hold an evidentiary hearing, the appellate court faulted the district court for its "fail[ure] to provide an adequate explanation for the relief it ordered." Id. at 103. Finding the trial court's devotion of "a mere four paragraphs of its order to explaining its reasons for the remedy" insufficient, the appellate court observed that the initial remedy was not accompanied by an explanation of the manner in which the remedy would accomplish the objectives of a remedial decree in an antitrust case. Id. In this regard, the appellate court recited that "a remedies decree in an antitrust case must seek to `unfetter a market from anticompetitive conduct,' Ford Motor Co., 405 U.S. at 577, 92 S.Ct. 1142, to `terminate the illegal monopoly, deny to the defendant the fruits of its statutory violation, and ensure that there remain no practices likely to result in monopolization in the future,' United States v. United Shoe Mach. Corp., 391 U.S. 244, 250, 88 S.Ct. 1496, 20 L.Ed.2d 562 (1968)." Id. (internal citations in original).

11. Remand

The appellate court offered specific guidance to this Court regarding the inquiry to be undertaken following remand. In this regard, the appellate court focused most of its attention on the merits of a structural remedy, noting in particular that if, in fact, Microsoft is a "unitary company," rather than the product of mergers and acquisitions, it is not scissile. Id. In addition, the appellate court reiterated its concern over the quantum of proof provided to support a causal connection between the exclusionary conduct and Microsoft's persistence in the dominant market position. Id. at 107. Notably, however, the appellate court did not remark that this Court should consider whether or not to impose any remedy. Instead, the appellate court advised this Court to "consider which of the [original] decree's conduct restrictions remain viable in light of [its] modification of the original liability decision," id. at 105, and admonished that the remedy imposed should be carefully "tailored to fit the wrong creating the occasion for the remedy," id. at 107 ("[W]e have drastically altered the scope of Microsoft's liability, and it is for the District Court in the first instance to determine the propriety of a specific remedy for the limited ground of liability we have upheld.").

B. District Court's Findings of Fact and Surviving Conclusions of Law

As this Court noted above, the inquiry on remand is fundamentally constrained and guided by the conclusions of the appellate court. The appellate court's conclusions, in turn, rely heavily upon the findings of fact entered by the district court following the liability trial. After a 76-day bench trial, Microsoft, 253 F.3d at 47, Judge Jackson entered 412 numbered paragraphs as his "Findings of Fact," see Findings of Fact, 84 F. Supp.2d 9. These findings provided the factual basis for the district court's ensuing conclusions of law, issued some four months later. See Microsoft, 253 F.3d at 48. In considering Microsoft's challenge to the district court's factual findings, the appellate court applied the usual deference to the district court's factual conclusions and found no "clear error," see id. at 118. Additionally, the appellate court held that the district court's factual findings permitted meaningful appellate review. Id. In particular, the appellate court refused to reverse the district court's factual findings relevant to the "commingl[ing] of browsing and non-browsing code." Id. at 66. Faced with Microsoft's continuing protestations that the district court's commingling finding was clearly erroneous, the appellate court specifically denied Microsoft's plea that it vacate Findings of Fact ¶ 159 "as it relates to the commingling of code." Id.

Because all of the district court's factual findings survived challenge on appeal, they comprise the law of this case and may be relied upon during the remedy phase of this proceeding. Crocker, 49 F.3d at 739. Indeed, it would make little sense to proceed to craft a remedy in the absence of substantial reliance upon the factual foundation which underlies the liability entered in this case. Hence, the factual findings of the district court, like the conclusions of the appellate court, comprise the foundation upon which this court must construct a remedy. Still, the Court remains mindful of the vital distinction between factual findings, however adverse, and legal conclusions.

A somewhat more complex problem is presented by the legal conclusions of the district court. Although exceedingly thorough in its analysis, the opinion of the appellate court did not specifically address at least one of the legal conclusions reached by Judge Jackson during the liability phase. In Part I.A.2.a.i of its opinion, the district court addressed the manner in which Microsoft battled the browser threat in the OEM channel of distribution. Microsoft, 87 F. Supp.2d at 39. The district court concluded that "Microsoft's campaign proceeded on three fronts":

First, Microsoft bound Internet Explorer to Windows with contractual and, later, technological shackles. . . . Second, Microsoft imposed stringent limits on the freedom of OEMs to reconfigure or modify Windows 95 and Windows 98. . . . Finally, Microsoft used incentives and threats to induce especially important OEMs to design their distributional, promotional and technical efforts to favor Internet Explorer to the exclusion of Navigator.

Id. In its review of the district court's liability findings, in Part II.B.1 and 2 of its opinion, the appellate court addressed these findings in a different sequence, considering first the license restrictions Microsoft imposed upon the OEMs, Microsoft, 253 F.3d at 59-64, and second the binding or "integration" of IE and Windows, id. at 64-67. The appellate court concluded its analysis of the OEM channel with its discussion of integration, never squarely discussing the district court's finding with regard to the use of "incentives and threats." See id. at 59-67.

Microsoft acknowledges that the appellate court declined to address individually all of Judge Jackson's specific findings of liability. Microsoft Proposed Conclusions of Law (hereinafter cited as "Microsoft Prop. Concl. of Law") ¶ 79. Microsoft contends that the "acts condemned by Judge Jackson," but not specifically addressed by the appellate court, "apparently were the basis for his conclusion that `Microsoft's conduct as a whole . . . reinforces the conviction that [Microsoft] was predacious.'" Id. (quoting Microsoft, 87 F. Supp.2d at 44) (emphasis omitted) (alteration by Microsoft). Drawing further upon this rationale, Microsoft argues that the appellate court's reversal of the "course of conduct" liability determination implicitly reverses any of the district court's liability findings not specifically addressed by the appellate court. See id.

While an attractive and simple resolution to a complex quandary, Microsoft's reasoning is flawed. In conflating all of Judge Jackson's remaining liability findings, Microsoft ignores the express holding of the appellate court. The appellate court determined to reverse the "course of conduct" liability on the grounds that the district court had failed to identify the acts sufficient to support its finding of liability: "[T]he District Court did not point to any series of acts, each of which harms competition only slightly but the cumulative effect of which is significant enough to form' an independent basis for liability." Microsoft, 253 F.3d at 78 (emphasis added). Tellingly, the appellate court enumerated "the only specific acts" relied upon by the district court in assessing liability on a "course of conduct" theory. Id. (emphasis added). In this vein, the appellate court recounted that "the only specific acts" identified by the district court, namely "Microsoft's expenditures in promoting its browser," were "not in themselves unlawful." Id. "Because the District Court identifie[d] no other specific acts as a basis for `course of conduct liability,'" the appellate court reversed that liability determination. Id.

In light of the basis for the appellate court's reversal on this point, it is antithetical to conclude that specific anticompetitive acts clearly described by the district court elsewhere in its conclusions of law are somehow reversed by the appellate court's rejection of the "course of conduct" finding of liability. Indeed, if these findings of anticompetitive conduct could have been treated as the basis for the district court's "course of conduct" liability finding, the appellate court would have considered such findings in reviewing the basis for the district court's "course of conduct" liability determination. Because the appellate court declined to look beyond the particular acts enumerated by the district court in conjunction with its "course of conduct" analysis, there is no basis upon which this Court can conclude that, by reversing liability based upon a "course of conduct," the appellate court implicitly reversed findings of anticompetitive conduct entered by Judge Jackson elsewhere in his opinion.

Although the Court rejects Microsoft's argument in this regard as without rational support, the Court need not dwell long on the appropriate treatment of acts identified by the district court as anticompetitive but not addressed by the appellate court, as Plaintiffs do not rely on any of these acts. Although Plaintiffs contend that Microsoft simply did not appeal Judge Jackson's finding of liability based upon the "incentives and threats" described in Findings of Fact ¶¶ 230-38, Plaintiffs assert that the clearly affirmed bases of liability are sufficient to guide this Court's consideration of "the appropriate remedial provisions as to Microsoft's relations with OEMs." Plaintiffs' Proposed Conclusions of Law (hereinafter cited as "Pl. Prop. Concl. of Law") at 5. Plaintiffs argue that the Court may make its determination of an appropriate remedy in the absence of any reliance upon the "incentives and threats" liability finding entered by Judge Jackson.*fn23 Because Plaintiffs denounce any reliance upon Judge Jackson's apportioning of liability for coercing OEMs with incentives and threats, neither will the Court rely upon such a finding of liability in its consideration of the appropriate remedy.

C. General Antitrust Law of Remedies

It has long been established that it is the job of the district court to frame the remedy decree in an antitrust case, and the district court has broad discretion in doing so. Int'l Salt Co. v. United States, 332 U.S. 392, 400-01, 68 S.Ct. 12, 92 L.Ed. 20 (1947). "The relief in an antitrust case must be `effective to redress the violations' and `to restore competition.'" Ford Motor Co., 405 U.S. at 573, 92 S.Ct. 1142 (quoting United States v. E.I du Pont de Nemours & Co., 366 U.S. 316, 326, 81 S.Ct. 1243, 6 L.Ed.2d 318 (1961)). Not only should the relief ordered "cure the ill effects of the illegal conduct, and assure the public freedom from its continuance," id. at 575, 92 S.Ct. 1142 (quoting United States v. United States Gypsum Co., 340 U.S. 76, 88, 71 S.Ct. 160, 95 L.Ed. 89 (1950)), "it necessarily must `fit the exigencies of the particular case,'" id. (quoting Int'l Salt, 332 U.S. at 401, 68 S.Ct. 12). Ultimately, the goal of a remedy in an equitable suit is not the "punishment of past transgression, nor is it merely to end specific illegal practices." Int'l Salt, 332 U.S. at 401, 68 S.Ct. 12. Rather, the remedy should "effectively pry open to competition a market that has been closed by [a] defendant['s] illegal restraints." Id. Equitable relief in an antitrust case should not "embody harsh measures when less severe ones will do," 2 PHILLIP E. AREEDA ET AL., ANTITRUST LAW ¶ 325a, at 246 (2d ed. 2000), nor should it adopt overly regulatory requirements which involve the judiciary in the intricacies of business management, United States v. Paramount Pictures, 334 U.S. 131, 163, 68 S.Ct. 915, 92 L.Ed. 1260 (1948).

In crafting a remedy specific to the violations, this Court is empowered to enjoin not only the acts for which the defendant was found liable, but "other related unlawful acts," lest "all of the untraveled roads to [restraint of trade] be left open and [] only the worn one be closed." Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 133, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969) (internal quotation marks and citations omitted). In this regard, the Court's remedy "is not limited to prohibition of the proven means by which the evil was accomplished, but may range broadly through practices connected with acts actually found to be illegal." Gypsum Co., 340 U.S. at 88-89, 71 S.Ct. 160; see also United States v. Bausch & Lomb Optical Co., 321 U.S. 707, 724, 64 S.Ct. 805, 88 L.Ed. 1024 (1944) ("Equity has power to eradicate the evils of a condemned scheme by prohibition of the use of admittedly valid parts of an invalid whole."). Notwithstanding this flexibility, the Court may not simply enjoin "all future violations of the antitrust laws." Zenith Radio, 395 U.S. at 133, 89 S.Ct. 1562. Rather, a remedy "should be tailored to fit the wrong creating the occasion for the remedy." Microsoft, 253 F.3d at 107. Moreover, the case law counsels that the remedial decree should be "as specific as possible, not only in the core of its relief, but in its outward limits, so that parties may know[] their duties and unintended contempts may not occur." Int'l Salt, 332 U.S. at 400, 68 S.Ct. 12.

In reversing the district court's original order of remedy in this case, the appellate court criticized the district court for failing to explain how the remedy would "`unfetter a market from anticompetitive conduct,' Ford Motor Co., 405 U.S. at 577, 92 S.Ct. 1142 . . . `terminate the illegal monopoly, deny to the defendant the fruits of its statutory violation, and ensure that there remain no practices likely to result in monopolization in the future,' [United Shoe, 391 U.S. at 250, 88 S.Ct. 1496]." Microsoft, 253 F.3d at 103. In attempting to provide the explanation sought by the appellate court, this Court notes at the outset that the facts and circumstances of this case necessarily affect the extent to which this Court's order of remedy will "accomplish those objectives." Id. It bears repeating that the monopoly in this case was not found to have been illegally acquired, see United States v. Microsoft, 56 F.3d 1448, 1452 (D.C.Cir. 1995),*fn24 but only to have been illegally maintained. See Microsoft 253 F.3d at 46. Moreover, the appellate court observed that "the District Court expressly did not adopt the position that Microsoft would have lost its position in the OS market but for its anticompetitive behavior." Id. at 107 (citing Findings of Fact ¶ 411). In this regard, the "causal connection between Microsoft's exclusionary conduct and its continuing position in the operating systems market" was established "only through inference." Id. at 106-07. Given these circumstances, as the parties concede, it does not seem to be a valid objective for the remedy in this case to actually "terminate" Microsoft's monopoly. Rather, the proper objective of the remedy in this case is termination of the exclusionary acts and practices related thereto which served to illegally maintain the monopoly.

The fact that the "causal connection between Microsoft's exclusionary conduct and its continuing position in the operating systems market" was established "only through inference," id., has given rise to significant disagreement between the parties as to Plaintiffs' burden on remand. In its appeal, Microsoft "urge[d]" the circuit court to "reverse on the monopoly maintenance claim, because plaintiffs never established a causal link between Microsoft's anticompetitive conduct, in particular its foreclosure of Netscape's and Java's distribution channels." Id. at 78. Relying heavily on the treatise on antitrust law authored by Phillip E. Areeda and Herbert Hovenkamp, the appellate court determined that liability in this case could be established through an inference of causation. Id. at 79 (citing 3 PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW ¶ 651c, at 78 (rev. ed. 1996)). Applying this "rather edentulous test for causation" the appellate court identified two relevant inquiries, the satisfaction of which would result in liability:

(1) whether as a general matter the exclusion of nascent threats is the type of conduct that is reasonably capable of contributing significantly to a defendant's continued monopoly power and (2) whether Java and Navigator reasonably constituted nascent threats at the time Microsoft engaged in the anticompetitive conduct at issue.

Id. at 79-80. On the record from the district court, the appellate court readily concluded that both inquiries had been satisfied and that liability must be imposed. Id.

The appellate court noted, however, that Microsoft's "concerns over causation have more purchase in connection with the appropriate remedy." Id. at 80. In particular, the appellate court noted that the strength of the causal connection is to be considered "in connection with the appropriate remedy issue, i.e., whether the court should impose a structural remedy or merely enjoin the offensive conduct at issue." Id. Again relying upon Areeda and Hovenkamp, the appellate court focused on the structural remedy that had been imposed by Judge Jackson and identified a relationship between the evidence of causation and the imposition of such a "radical" remedy:

As we point out later in this opinion, divestiture is a remedy that is imposed only with great caution, in part because its long-term efficacy is rarely certain. Absent some measure of confidence that there has been an actual loss to competition that needs to be restored, wisdom counsels against adopting radical structural relief. See 3 AREEDA & HOVENKAMP, ANTITRUST LAW ¶¶ 653b, at 91-92 ("[M]ore extensive equitable relief, particularly remedies such as divestiture designed to eliminate the monopoly altogether, raise more serious questions and require a clearer indication of a significant causal connection between the conduct and creation or maintenance of the market power.").

Id. (internal citation omitted). Later in the opinion, the appellate court again quoted from Areeda and Hovenkamp, highlighting the need for "a clearer indication of a significant causal connection between the conduct and the creation or maintenance of the market power" where the remedy is structural relief. Id. at 106 (quoting 3 AREEDA & HOVENKAMP, ANTITRUST LAW ¶ 653b, at 91-92) (emphasis added by appellate court). The appellate court instructed that in the absence of "a sufficient causal connection between Microsoft's anticompetitive conduct and its dominant position in the OS market . . . the antitrust defendant's unlawful behavior should be remedied by `an injunction against the continuation of that conduct.'" Id. (quoting 3 AREEDA & HOVENKAMP, ANTITRUST LAW ¶ 650a, at 67).

In effect, the appellate court appears to have identified a proportionality between the strength of the evidence of the causal connection and the severity of the remedy. Accordingly, the "[m]ere existence of an exclusionary act does not itself justify full feasible relief against the monopolist to create maximum competition." Id. (quoting 3 AREEDA & HOVENKAMP, ANTITRUST LAW ¶ 650a, at 67). Similarly, because structural relief is "designed to eliminate the monopoly altogether," 3 AREEDA & HOVENKAMP, ANTITRUST LAW ¶ 653b, at 91, "wisdom counsels against adopting radical structural relief" in the "absen[ce of] some measure of confidence that there has been an actual loss to competition that needs to be restored," Microsoft, 253 F.3d at 80. Instead, the court crafting a remedy must assess the strength of the causation evidence that established liability and tailor the relief accordingly. Id. at 107.*fn25

While the appellate court's discussion of causal connection in Parts II.C and V.F of its opinion remains instructive on the issue of remedy, it bears emphasizing that the appellate court was largely concerned in those portions of its opinion with the propriety of a structural remedy of dissolution. Because Plaintiffs have not persisted in their request for a structural remedy of dissolution, for the most part, this Court examines the existing causal connection through a different lens than that anticipated and addressed by the appellate court.*fn26 Nevertheless, the Court's determination of the appropriate remedy in this case reflects, among other considerations the strength of the evidence linking Defendant's anticompetitive behavior to its present position in the market.

The appellate court also noted a "practical" difficulty facing this Court relevant to the issue of remedy. Microsoft, 253 F.3d at 48. The appellate court appropriately observed at the outset of its review the "problematic" fact that over six years, now seven, "have passed since Microsoft engaged in the first conduct plaintiffs allege to be anticompetitive." Id. at 49. This span of time is an "eternity in the computer industry," which is characterized by rapid change. Id. The appellate court further acknowledged that the "dramatic" changes that can occur in the computer industry in such a short period of time "threaten[] enormous practical difficulties for courts considering the appropriate measure of relief in equitable enforcement actions." Id. The appellate court recognized that in such cases "[c]onduct remedies may be unavailing . . . because innovation to a large degree has already rendered the anticompetitive conduct obsolete (although by no means harmless)." Id. At a minimum opined the appellate court, such complexities demand an "evidentiary hearing on remedies-to update and flesh out the available information." Id.

The parties and the Court undertook the lengthy process of precisely such an evidentiary hearing and endeavored to update and flesh out the relevant factual information. Notwithstanding these substantial efforts and the benefits derived therefrom, as the appellate court certainly anticipated, there remain difficulties inherent in crafting conduct remedies an "eternity" after commencement of the relevant conduct. Aware, though undeterred, by these difficulties, the Court, in the exercise of its discretion, has arrived at an appropriate remedy for Microsoft's illegal behavior. Ever-mindful of the complexities identified by the appellate court and guided by the words of the Immortal Bard that "it is excellent [t]o have a giant's strength, but it is tyrannous [t]o use it like a giant,"*fn27 the Court sets forth its findings of fact, order of remedy, and justification therefor.

III. SCOPE OF THE REMEDY

On December 7, 2001, Plaintiffs and Defendant simultaneously filed their competing proposals for a remedy in this case. In response to Plaintiffs' proposal and the discovery which ensued, Microsoft filed a motion in limine seeking "to exclude all evidence concerning server operating systems, hand-held devices, television set-top boxes and Web services." Def. Mot. in Limine to Exclude Testimony on Products Unrelated to the Limited Ground of Liability Upheld by the Ct. of Appeals at 1. Microsoft argues, inter alia, that these devices and products fall outside of the monopoly market and are unrelated to the conduct found to be anticompetitive and, therefore, are inappropriate for consideration and coverage by the remedy in this case. Id. All of the Microsoft conduct which was found to be exclusionary in violation of § 2 of the Sherman Act was directed at "preventing the effective distribution and use of products that might threaten that monopoly." Microsoft, 253 F.3d at 58. The type of products at which Microsoft directed this conduct were identified by the district court as "middleware," with a specific focus on the Navigator and the Java technologies. Having reserved ruling on Microsoft's motion and permitted the parties to further develop the relevant facts, the Court now addresses as a threshold matter the manner in which Plaintiffs propose to treat "middleware" in the remedial phase of this case.

Ordinarily, the Court might conclude rather swiftly that products which fall outside of the relevant market are inappropriate for discussion and consideration by the Court in conjunction with the crafting of a remedy for illegal monopoly maintenance. The Court does not do so in this case because the theory of liability pursuant to which Plaintiffs' prevailed involved Microsoft's response to a type of product which did not fall within the monopoly market, but nevertheless posed a potential threat to Microsoft's monopoly. Accordingly, the Court pauses to examine the monopoly market, the products which were excluded from that market, and the relationship of middleware to this market.

The definition of the relevant product market is a necessary element of a monopolization charge. See United States v. Grinnell Corp., 384 U.S. 563, 570, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966); Microsoft, 253 F.3d at 51. As noted above, the monopoly market in this case is the market for Intel-compatible PC operating systems. See Microsoft, 253 F.3d at 51. Microsoft objected to this market definition, arguing that the district court had defined the market too narrowly, improperly excluding "three types of products: non-Intel compatible operating systems (primarily Apple's Macintosh operating system, Mac OS), operating systems for non-PC devices (such as handheld computers and portal [W]ebsites), and `middleware' products, which are not operating systems at all." Id. at 52. The appellate court summarily rejected Microsoft's challenge with regard to the exclusion of the first two types of products, observing that Microsoft had not challenged the key district court findings of fact which determined that the products were not likely to perform the functions of a PC anytime in the near future. Id. The appellate court considered more carefully Microsoft's argument with regard to the exclusion of middleware from the market, but ultimately concluded, id. at 54, that middleware did not meet the test of "reasonable interchangeability," id. at 53.

Microsoft subsequently challenged as inconsonant the exclusion of middleware from the market and Plaintiffs' theory of liability that Microsoft's suppression of the middleware threat could amount to illegal monopoly maintenance in violation of § 2. Id. at 54. The appellate court rejected this contention based upon the distinction between the level of competitive threat relevant to establishing a market definition and the level of competitive threat relevant to the imposition of § 2 liability. Id. "Nothing in § 2 of the Sherman Act limits its prohibition to actions taken against threats that are already well-developed enough to serve as present substitutes." Id. The appellate court observed, in this regard, that because middleware was merely a nascent threat, id., it may simultaneously threaten to "become a viable substitute for Windows" and yet, remain outside of the relevant monopoly market because it is "not presently a viable substitute for Windows." Id. (emphasis added). Based upon this analysis, the appellate court affirmed the district court's identification of the relevant market and determined that Microsoft possessed monopoly power in that market. Id. at 54-58.

Notably, the district court in the liability phase provided only a general definition of what exactly constitutes "middleware," defining the term largely through example and the identification of key attributes, rather than absolute characteristics. As the district court pointed out in its Findings of Fact, Navigator had "three key middleware attributes that endow[ed] it with the potential to diminish the applications barrier to entry." Findings of Fact ¶ 69. The Navigator browser was a complement to Windows, rather than a substitute operating system and, therefore, hac the potential to gain widespread use. Id. Additionally, Navigator exposed "a set (albeit a limited one) of APIs" which provided platform capabilities, and "it ha[d] been ported to more than fifteen different operating systems." Id. Similarly, the Java technology exposed its own APIs and, thus, enabled applications written in Java to be ported with relative ease. Id. ¶ 74. Java had the potential to achieve the necessary ubiquity because it could be, and ultimately was, distributed along with Navigator. Id. ¶ 76. It is noteworthy that the district court regarded the potential of Navigator and Java to "hasten the demise of the applications barrier to entry" as a "combined effort" resulting from the "symbiosis" between the two technologies, which exceeded the potential independently held by either of the technologies. Id. ¶ 77. Although they played, at best, an extremely limited role in the liability findings, mention was made of the potential threats to Microsoft's monopoly by (1) Lotus Notes, which presented "a graphical interface that was common across multiple operating systems; . . . exposed a set of APIs to developers; and, like Navigator, . . . served as a distribution vehicle for Sun's Java runtime environment," id. ¶ 78; (2) Intel's Native Signal Processing software, "which interacted with the microprocessor independently of the operating system and exposed APIs directly to developers of media content," id.; and (3) Apple's and RealNetworks' multimedia playback technologies, "which ran on several platforms (including the Mac OS and Windows) and similarly exposed APIs to content developers," id.

Drawing from this rather amorphous definition, as noted above, Plaintiffs identify a broad new set of technologies which they believe merits treatment by the remedy in this case. Plaintiffs appear to recognize that it is insufficient to simply identify other technologies that the district court excluded from the monopoly market and argue that these technologies are relevant to the remedy in this case on those grounds alone.*fn28 Instead, Plaintiffs attempt to establish a nexus between the newly identified technologies and the acts for which Microsoft was found liable. To establish this nexus, Plaintiffs propose that the newly identified technologies are "middleware," see States' Proposed Remedy ("SPR") § 22.w, or are software that poses a platform threat similar to that posed by middleware. Such a nexus, argue Plaintiffs, justifies imposition of a remedy for Microsoft's antitrust violations that broadly addresses these newly identified technologies, despite their virtual absence from the liability phase. Not surprisingly, Microsoft vehemently disagrees with the proposition that the technologies identified by Plaintiffs are sufficiently like Navigator and Java such that these technologies should be addressed by the Court's remedy in this case. As a result, the Court's consideration of the relevance of these newly identified technologies to the remedy in this case turns predominantly upon whether the particular technology can be viewed as a kind of middleware, or at least as a "nascent" threat which is similar to the middleware threats addressed during the liability phase.

In the following section, the Court examines factually the various middleware and middleware-related definitions proposed in the parties' two remedies. To provide the necessary background to this discussion, the Court commences the discussion with a brief examination of the case law relied upon by Plaintiffs that is specifically relevant to the scope of the remedy. The Court next addresses and renders factual findings regarding the treatment of middleware under the two competing remedy proposals, as these definitions play a significant role in defining the scope of the remedy. The Court then examines the new technologies identified by Plaintiffs, as well as the theories advanced by Plaintiffs to relate these technologies to the theory of liability in this case. Following the entry of factual findings on these topics, the Court applies the relevant case law and, in the exercise of its discretion, reaches appropriate conclusions regarding the inclusion or exclusion of these technologies from the scope of the remedy. The Court's determination with regard to these technologies then informs the Court's assessment of the appropriate treatment of middleware in the remedy. Lastly, the Court addresses, both factually and legally, other attempts by Plaintiffs to broaden the scope of the remedy in this case, as well as Microsoft's opposing view, which advocates a severe narrowing of the scope of the remedy in this case.

From this analysis the Court ultimately concludes that Plaintiffs' proposed definition of "middleware" is inconsonant with the treatment of the term during the liability phase of this case. Plaintiffs include in their definition of "middleware" almost any software product, without regard to the potential of the product to evolve into a true platform for other applications. In addition, the Court observes that Plaintiffs' middleware definition, because of its use throughout their proposed remedy, renders various provisions of Plaintiffs' remedy ambiguous and, therefore, unenforceable. A further flaw in Plaintiffs' treatment of middleware is the inclusion of technologies which fall outside of the relevant market and which do not pose a threat to Microsoft's monopoly similar to the threat posed by nascent middleware. While the Court does not fault Plaintiffs' general approach in looking beyond the relevant market to search for the new nascent threats, the Court is unable to conclude that Plaintiffs have established that all of these technologies have the capacity to increase competition within the relevant market. Notwithstanding the Court's rejection of Plaintiffs' "middleware" definition, the Court concludes that one of the technologies identified by Plaintiffs, server/network computing, has the capacity to function in a role akin to middleware, and thereby increase competition in the relevant market. Accordingly, the Court determines to address this technology in a portion of the remedy where the Court need not corrupt the definition of "middleware" in order to do so.

A. Legal Authority Related to Scope of the Remedy

"The determination of the scope of the decree to accomplish its purpose is peculiarly the responsibility of the trial court." Gypsum, 340 U.S. at 89, 71 S.Ct. 160. Plaintiffs premise their theory with regard to the appropriate scope of the remedy for Microsoft's antitrust violations on Supreme Court precedent that instructs that an appropriate remedy in antitrust cases typically exceeds "a simple proscription against the precise [unlawful] conduct previously pursued," Nat'l Soc'y of Prof `l Eng'rs v. United States, 435 U.S. 679, 698, 98 S.Ct. 1355, 55 L.Ed.2d 637 (1978), because "a mere prohibition of the precise scheme would be ineffectual to prevent restraints," Bausch & Lomb, 321 U.S. at 727, 64 S.Ct. 805. See Pl. Supp. Mem. in Opp'n to Def. Mot. in Limine to Exclude Testimony on Products Unrelated to the Limited Ground of Liability Upheld by the Ct. at 37. Indeed, the Supreme Court has long held that in order to "cure the ill effects of the illegal conduct, and assure the public freedom from its continuance," the remedial decree imposed by the Court in this case should "range broadly through practices connected with acts actually found to be illegal." Gypsum, 340 U.S. at 88-89, 71 S.Ct. 160. Yet despite unquestionable legal authority which indicates that the Court may address conduct beyond the precise parameters of that found to violate the antitrust laws, Plaintiffs advocate an extraordinarily expansive view of the conduct that can be encompassed by a remedy in this case.

Plaintiffs rely chiefly upon four cases in which the Supreme Court sanctioned behavioral remedies that governed conduct beyond the parameters of the antitrust violation. The earliest of the cases heavily relied upon by Plaintiffs is International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20 (1947). In that case, the defendant, engaged in the commerce of salt and related products, owned patents "on two machines for utilization of salt products." Id. at 394. The defendant distributed the machines principally through leases. Id. The terms of the equipment leases required the lessees to purchase from the defendant "all unpatented salt and salt tablets consumed in the leased machine." Id. Discussing whether this aspect of the leases impermissibly restrained trade, the Supreme Court concluded that although the patents conferred upon the defendant a "right to restrain others from making, vending or using the patented machine . . . the patents confer no right to restrain use of, or trade in, unpatented salt." Id. at 395-96, 68 S.Ct. 12. As a result, the defendant was held liable for the violation of antitrust law. Id. at 396, 68 S.Ct. 12. To redress the liability finding, the defendant proposed a decree that enjoined it from refusing to license, lease, or sell any machine on the grounds that a licensee, lessee, or purchaser had used or planned to use salt not manufactured by defendant. Id. at 399 n. 8, 68 S.Ct. 12. The government, however, sought and obtained a decree that, inter alia, directed the defendant to lease or sell the salt utilization machines generally to any applicant on non-discriminatory terms and conditions, id. at 398 n. 7, 68 S.Ct. 12, notwithstanding the fact that the record did not reflect any "threat [by the defendant] to discriminate after the judgment of the Court is pronounced," id. at 399, 68 S.Ct. 12.

In response to the defendant's challenge to the decree on the grounds that "the injunction should go no farther than the violation or threat of violation," the Supreme Court explained:

We cannot agree that the consequences of proved violations are so limited. The fact is established that the appellant already has wedged itself into this salt market by methods forbidden by law. The District Court is not obliged to assume, contrary to common experience, that a violator of the antitrust laws will relinquish the fruits of his violation more completely than the court requires him to do. And advantages already in hand may be held by methods more subtle and informed, and more difficult to prove, than those which, in the first place, win a market. When the purpose to restrain trade appears from a clear violation of law, it is not necessary that all of the untraveled roads to that end be left open and that only the worn one be closed. The usual ways to the prohibited goal may be blocked against the proven transgressor and the burden put upon him to bring any proper claims for relief to the court's attention.

Id. at 400, 68 S.Ct. 12. With this statement, the Supreme Court made clear that once liable for an antitrust violation, a defendant may be restricted in its business so as to force a relinquishment of the fruits of the anticompetitive conduct. It is this surrender which is to assist the courts in "pry[ing] open to competition a market that has been closed by defendants' illegal restraints." Id. at 401, 68 S.Ct. 12. Notably, however, despite the language regarding "relinquishment" of illegally obtained "fruits," the remedy affirmed by the Court in International Salt did not mandate a divestiture of the defendant's assets or a structural division of the defendant, but merely regulated the terms pursuant to which the defendant could engage in its business of leasing or selling the salt machines. Id. at 398 n. 7, 68 S.Ct. 12.

The following year, in United States v. Paramount Pictures, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260 (1948), the Supreme Court reiterated its view that the equitable powers of the courts to remedy antitrust violations may justify "uproot[ing] all parts of an illegal scheme-the valid as well as the invalid-in order to rid the trade or commerce of all taint" of the anticompetitive actions. Id. at 148, 68 S.Ct. 915. The underlying facts of that case concerned, among a number of other restraints, agreements between movie distributors and exhibitors, known as "clearances," which were "designed to protect a particular run of a film against a subsequent run."*fn29 Id. at 144-45, 68 S.Ct. 915. The district court in that case concluded that these agreements while not per se unlawful, could constitute unreasonable restraints of trade in some instances. Id. at 146-47, 68 S.Ct. 915. On the facts before it, the district court imposed liability upon the defendants for "a conspiracy to restrain trade by imposing unreasonable clearances." Id. at 147, 68 S.Ct. 915. Having affirmed the finding of liability on this point, the Supreme Court examined the remedial decree provision that placed the burden on the defendant distributor to prove the legality of any clearance that was subsequently challenged. The Supreme Court concluded that the remedy imposed by the district court was appropriate because the district court "could . . . have eliminated clearances completely for a substantial period of time, even though . . . they were not illegal per se." Id. at 148, 68 S.Ct. 915. The Supreme Court observed in this regard that "[t]hose who have shown such a marked proclivity for unlawful conduct are in no position to complain that they carry the burden of showing that their future clearances come within the law." Id.

With these two rulings, the Supreme Court confirmed that a remedy in an antitrust case seeks not only to eliminate illegal conduct, but to address the effects of that conduct upon the marketplace. Pursuant to this view, therefore, it may be appropriate in some instances that a remedy address some legal conduct which, by its relation to the illegal and anticompetitive conduct, perpetuates the antitrust violator's restraint on trade. At the same time, however, nothing in these two cases indicates that an antitrust violator should be subject to an outright denial of the ability to continue to do business and to compete with other participants in the market and in other markets.

Plaintiffs next direct the Court to the Supreme Court's holding in Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969). In that case, the Supreme Court considered antitrust claims relating to various unlawful "patent pools," including those in Canada, England, and Australia. Id. at 105, 89 S.Ct. 1562. The trial court found liability relating to all of the "patent pools" and entered "injunctive relief against further participation in any arrangement to prevent Zenith from exporting electronic equipment into any foreign market." Id. at 107, 89 S.Ct. 1562 (emphasis added). The Supreme Court agreed with the court of appeals that there was insufficient evidence to support a claim for money damages relating to the Australian and English markets, id. at 126-28, 89 S.Ct. 1562 (England), 129, 89 S.Ct. 1562 (Australia), but agreed with the district court that defendant and another entity "were conspiring to exclude Zenith and others from the Canadian market," id. at 131, 89 S.Ct. 1562. Accordingly, the Supreme Court concluded that, "[j]udged by the proper standard, the record before [it] warranted the injunction with respect to Canada." Id. Notwithstanding this conclusion, the Court went on to "reinstate the injunction entered by the District Court insofar as it more broadly barred [the defendant] from conspiring with others to restrict or prevent Zenith from entering any other foreign market." Id. at 132, 89 S.Ct. 1562. The Court explained:

In exercising its equitable jurisdiction, "(a) federal court has broad power to restrain acts which are of the same type or class as unlawful acts which the court has found to have been committed or whose commission in the future unless enjoined, may fairly be anticipated from the defendant's conduct in the past." . . . We see no reason that the federal courts, in exercising the traditional equitable powers extended to them by § 16, should not respond to the "salutary principle that when one has been found to have committed acts in violation of a law he may be restrained from committing other related unlawful acts."

Id. at 132-33, 89 S.Ct. 1562 (quoting NLRB v. Express Publishing Co., 312 U.S. 426, 435, 436, 61 S.Ct. 693, 85 L.Ed. 930 (1941)). It is from this passage that Plaintiffs appear to derive their familiar refrain that the remedy imposed by this Court should reach the conduct found to violate the antitrust laws, as well as conduct which is "the same or similar" to such illegal conduct. Importantly, however, as the Zenith Radio Court expressed the rule, the related acts must also be "unlawful" or of the "same type or class" in order to warrant injunction. Id. In this regard, the Zenith Radio case does not support so broad a reading as to say that clearly lawful practices may be enjoined simply because they will weaken the antitrust violator's competitive position.

Finally, Plaintiffs call to this Court's attention the Supreme Court's holding in National Society of Professional Engineers v. United States that an injunction that "goes beyond a simple proscription against the precise conduct previously pursued . . . is entirely appropriate." 435 U.S. at 698, 98 S.Ct. 1355. In that case, upon finding that an association's cannon of ethics prohibiting competitive bidding by its members was unlawful per se, the district court enjoined the association "from adopting any official opinion, policy statement, or guideline stating or implying that competitive bidding is unethical." Id. at 697, 98 S.Ct. 1355. The Supreme Court affirmed liability and rejected the defendant's contention that the provision should be struck down because of its potential, if broadly read, to "block legitimate paths of expression on all ethical matters relating to bidding." Id. at 698, 98 S.Ct. 1355. Quoting from International Salt, the Supreme Court noted that the "transgressor" could "bring any proper claims for relief [from the remedy] to the court's attention," id. (quoting 332 U.S. at 400, 68 S.Ct. 12) (quotation marks omitted), should the defendant "wish[] to adopt some other ethical guideline more closely confined to the legitimate objective of preventing deceptively low bids," id. at 699, 98 S.Ct. 1355 (quoting the court of appeals opinion in that case) (quotation marks omitted).

These four cases, argue Plaintiffs, comprise a "rich body of case law" which supports their expansive view of the remedy. Pl. Supp. Mem. in Opp'n to Def. Mot. in Limine to Exclude Testimony on Products Unrelated to the Limited Ground of Liability Upheld by the Ct. of Appeals at 40. The Court does not agree that this body of law, though it may be "rich," can withstand the heavy burden heaped upon it by Plaintiffs. Undoubtedly Plaintiffs are correct that there is ample precedent to support the imposition of conduct remedies which go beyond the specific acts found to be anticompetitive, as the Supreme Court stated in a more recent summary of its own body of law on the subject:

The suggestion that antitrust violators may not be required to do more than return the market to the status quo ante is not a correct statement of the law. In United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260, we sustained broad injunctions regulating motion picture licenses and clearances which were not related to the status quo ante.

Ford Motor Co., 405 U.S. at 573 n. 8, 92 S.Ct. 1142 (citations and quotation marks omitted). Plaintiffs' remedy, however, extends this precedent well beyond its clear and logical application. In each of the cases relied upon by Plaintiffs, to the extent that the remedy imposed exceeded the specific anticompetitive conduct, the restrictions were closely related to the anticompetitive conduct. As the Court explains in detail below, in this case, the scope of Plaintiffs' proposal exceeds most rational extensions of injunctive relief for the anticompetitive conduct. While some of the areas of expansion proposed by Plaintiffs are closely related to the circumstances which gave rise to liability in this case, the majority of practices that Plaintiffs seek to enjoin in relation to alleged "bad" acts by Microsoft do not fall squarely within the category of "acts which are of the same type or class" as those found to violate the antitrust laws. Zenith Radio, 395 U.S. at 132, 89 S.Ct. 1562.

B. Findings of Fact Related to Scope of the Remedy

1. Introduction

"[A] `full exploration of facts is usually necessary in order (for the District Court) properly to draw (an antitrust) decree' so as `to prevent future violations and eradicate existing evils.'" United States v. Ward Baking Co., 376 U.S. 327, 330-31, 84 S.Ct. 763, 11 L.Ed.2d 743 (1964) (quoting Associated Press v. United States, 326 U.S. 1, 22, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945)). The Court observes at the outset of its examination of the evidence in this case that, in the present context, the ability of the Court to render findings of fact, in the ordinary sense, is rather limited. As the appellate court itself observed, "drafting an antitrust decree by necessity `involves predictions and assumptions concerning future economic and business events.'" Microsoft, 253 F.3d at 102 (quoting Ford Motor Co., 405 U.S. at 578, 92 S.Ct. 1142). Whether or not this Court accepts a particular factual prediction often rests upon whether the witness has identified a sound basis in fact or logic to justify the prediction. Where no such basis has been identified, unless self-evident to the Court, the Court may accord little weight to the prediction. Similarly, because of the predictive nature of the testimony, much of the factual testimony is meaningless unless such testimony is considered together with the accompanying argument regarding the intended use of the testimony. The Court observes in this regard that, quite often, Plaintiffs' arguments are presented primarily through the testimony of their witnesses. Recognizing the importance of addressing these intertwined factual and legal assertions, the Court sets forth this testimony as a part of its factual discussion. In many instances, however, the Court neither credits nor rejects these intertwined assertions in its factual discussion because the Court ultimately finds the argument based thereon to be unpersuasive or irrelevant.

The Court further observes that, in this proceeding, factual testimony often resembles that which would otherwise appear to be a legal or discretionary conclusion. This convergence is understandable given that issues of fact and law tend to lose their already faint distinctions in the context of any discussion regarding what constitutes an appropriate or sufficient remedy. Nevertheless, in rendering its separate factual findings pursuant to Rule 52 of the Federal Rules of Civil Procedure, the Court has endeavored to draw the necessary distinction between predictive factual assertion and legal conclusion.

Prior to entering factual findings, the Court pauses to address the role played by Microsoft's competitors in this proceeding. It is both understandable and expected that Plaintiffs would turn to industry participants to develop the factual record regarding the impact of Microsoft's illegal conduct upon competition, to identify any new technologies which may be relevant to the issue of remedy, and to explain the relation of such technologies to the monopoly market. Undoubtedly, testimony from industry participants played a role during the liability phase, as such participants are most likely to have the relevant factual knowledge. See Microsoft, 87 F. Supp.2d at 34; Findings of Fact, 84 F. Supp.2d 9. Thus, to the extent that Microsoft's competitors have offered testimony explaining various technologies and the impact of potential remedial provisions, their testimony is often useful to the Court. Nevertheless, where such testimony reveals a self-interest in a particular remedial provision which is not balanced by a particular benefit to competition as a whole or to other participants in the industry, the Court, of necessity, considers with caution the views of these industry participants. The Court takes careful note of those remedial proposals which advance the interests of particular competitors and takes pains to ensure that the remedy in this case is not a vehicle by which such competitors can advance their own interests. See Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 458-59, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993); Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 110, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986); see also Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). Any other result would run contrary to antitrust law and principles of equity.

The Court has considered the evidence submitted by the parties, made determinations as to its relevancy and materiality, assessed the credibility of the testimony of the witnesses, both written and oral, and ascertained the probative significance of the documentary and visual evidence presented. Based upon the Court's consideration of the entire record in this case and all of the reasonable inferences to be drawn therefrom, the Court sets forth the following factual findings. The Court sets forth additional factual findings in Appendix A.

2. Treatment of Middleware

Plaintiffs and Defendant have proposed detailed injunctive relief as the remedy in this case. See Pl.Ex. 1509 (hereinafter "States' Proposed Remedy" or "SPR"); Def. Ex. 1020 (hereinafter "Second Revised Proposed Final Judgment" or "SRPFJ"). Integral to understanding the two remedies proposed in this case is a preliminary understanding of the manner in which the two remedies treat middleware. In simple terms, the treatment of middleware in the two remedies plays a significant role in defining the scope of products which will receive various protections under the terms of the respective remedies. For example, both proposed remedies impose restrictions upon Microsoft's ability to retaliate against companies which sell or support third-party middleware. See, e.g., SPR § 8; SRPFJ § III.A. In addition, both proposed remedies address the middleware portions of Microsoft's operating system, imposing certain requirements upon Microsoft with regard to its product design related to these portions of its operating system. See, e.g., SPR § 2.c; SRPFJ § III.H. By way of further example, both proposed remedies require Microsoft to provide certain kinds of technical information with regard to the interaction between its operating system and its software products which are treated as Microsoft middleware. See, e.g., SPR § 4; SRPFJ § III.D. By addressing middleware of various types, both remedies intend to increase the ability of thirdparty middleware to provide platform capabilities which rival the platform function of the Windows operating system.

a. "Middleware" and Related Definitions in Microsoft's Proposal

Despite these similarities in addressing the treatment of middleware, the two remedy proposals adopt rather distinct and divergent approaches to defining the term. Microsoft's proposed remedy does not actually use the term "middleware" standing alone, but instead addresses primarily two types of software: "Microsoft Middleware Products" and "Non-Microsoft Middleware Products." As is quite apparent from the terminology, Microsoft's remedy proposal draws a distinction between middleware technology incorporated into Microsoft's own products and the middleware capabilities of third-party software products. Somewhat counter-intuitively, "Microsoft Middleware Products" and "Non-Microsoft Middleware Products," as defined in the SRPFJ, do not mirror each other, meaning that "Microsoft Middleware Products" are not defined as the Microsoft versions of "Non-Microsoft Middleware Products." See SRPFJ § VI.K, N. This unexpected relationship between the two definitions results from the different uses of the definitions in specific portions of Microsoft's remedy proposal.

The term "middleware," as used in the liability phase of this case, was not limited to precise types of functionality, but instead encompassed products displaying certain "key" attributes that "endow" the technology with the "potential to diminish the applications barrier to entry." Findings of Fact ¶ 69. In other words, the middleware in need of protection was characterized as the software products which "Microsoft feared . . . because they facilitated the development of user-oriented software that would be indifferent to the identity of the underlying operating system." Findings of Fact ¶ 78. The liability findings of this case primarily concern Microsoft's efforts to compete with two specific middleware products: (1) the Navigator Web browsing software from Netscape and (2) Sun's Java technologies. See Microsoft, 253 F.3d at 53. Plaintiffs established that Navigator and Java, because they were cross-platform-meaning they ran on multiple PC operating systems-had the potential to develop into software development platforms that would attract the attention of applications developers. See id. The district and appellate courts accepted Plaintiffs' theory that, if a sufficient number of ISVs wrote applications that drew on capabilities provided by these middleware platforms, consumers would have less interest in running applications on Windows and might use non-Microsoft operating systems under their Web-browsing and/or Java software layer, such that the Windows base could be replaced with some other operating system that would support the middleware. Id. at 55; Findings of Fact ¶¶ 28-29. In this regard, the surviving liability determinations turn largely on Microsoft's efforts to thwart Netscape's ability to distribute Navigator and Sun's ability to distribute Java in the primary channels of distribution. See Microsoft, 253 F.3d at 59-78.

The potential competitive significance of Navigator and Java turned on the key attributes of those programs which, together, held the potential to provide an easily portable software development platform.*fn30 Findings of Fact ¶¶ 69-77. First, the software provided a complement to Windows, rather than a replacement. Id. ¶¶ 69-70, 73-74. In addition, Navigator and Java exposed a set of APIs which provided a platform so that developers, relying on the platform capabilities of the programs, could write multiple types of applications to run on Navigator and Java. Id. ¶ 69, 74. Finally, Navigator and Java both ran on Windows, as well as other PC operating systems, such that reliance on Navigator and Java's API set would render applications instantly portable to multiple operating systems. Id. Adding to this potential was the newly emerging popularity of the Internet and Internet browsing software, which provided a significant purchasing incentive to first-time PC buyers. Id. ¶ 70.

i. "Non-Microsoft Middleware" in the SRPFJ

Given the defining trait of running on multiple operating systems, "middleware," as the term was utilized during the liability phase, most frequently refers to third-party, non-Microsoft software. Microsoft's own software products are unlikely to behave as true middleware because Microsoft, as the monopolist, has little interest in creating an alternative platform which is portable from Microsoft's operating system to a non-Microsoft operating system. Still, because Microsoft software products often provide a functionality similar to that provided by a third-party middleware product, such software is often treated as Microsoft middleware. Microsoft's remedy proposal therefore uses the term "Non-Microsoft Middleware" to make clear the reference to third-party software. "Non-Microsoft Middleware" is defined in the SRPFJ as:

a non-Microsoft software product running on a Windows Operating System Product that exposes a range of functionality to ISVs through published APIs, and that could, if ported to or made interoperable with, a non-Microsoft Operating System, thereby make it easier for applications that rely in whole or in part on the functionality supplied by that software product to be ported to or run on that non-Microsoft Operating System.

SRPFJ § VI.M. "Non-Microsoft Middleware," as that term is defined in the SRPFJ, captures the essence of the middleware threats which were discussed during the liability phase. See id. In fact, the definition of "Non-Microsoft Middleware" expands beyond the middleware discussed at the liability phase in that it does not require that the software products already run on multiple PC operating systems, only that they have the potential, if ported to such operating systems, to serve as platforms for applications. See id.

The term "Non-Microsoft Middleware" is noteworthy for the breadth of its coverage of software products without limitation as to specific types of functionality. Consistent with the liability phase, these software products are principally limited by the requirement that they run on Microsoft's monopoly product-Windows, while exposing a range of functionality through published APIs. Id. "Non-Microsoft Middleware" is utilized in significant portions of Microsoft's remedy proposal and is the term which most often identifies the products which will receive some form of protection under Microsoft's remedy proposal. For example, § III.A of the SRPFJ prohibits Microsoft, inter alia, from retaliating against OEMs for supporting in any way "Non-Microsoft Middleware." Id. § III.A. Likewise, § III.C of Microsoft's remedy proposal restricts Microsoft's ability to impose license restrictions upon OEMs with regard to the installation and display of icons, shortcuts, and menu entries for "Non-Microsoft Middleware." Id. § III.C. Therefore, under the umbrella of "Non-Microsoft Middleware," Microsoft's remedy proposal affords coverage or protection to a wide variety of third-party software products.*fn31

ii. "Non-Microsoft Middleware Product" in the SRPFJ

Microsoft's proposed remedy also uses the term "Non-Microsoft Middleware Product," which is defined similarly to "Non-Microsoft Middleware," but adds a requirement that "at least one million copies" of the product "were distributed in the United States within the previous year." SRPFJ § VI.N. Some of Plaintiffs' witnesses contended that the definition of "Non-Microsoft Middleware Product" is in discord with the use of the term "middleware" during the liability phase because it requires some degree of popularity for the product before it is covered by the definition as a middleware product. Specifically, Plaintiffs' witnesses pointed to the "one-million-copies" threshold mark in the "Non-Microsoft Middleware Product" definition and argued that it excludes the kinds of nascent threats which are most similar to the products toward which Microsoft was found to have directed its illegal conduct. See, e.g., Ashkin ¶ 169; Richards ¶ 139. To the contrary, the one-million-copies threshold is consistent with the treatment of middleware in the liability phase of this proceeding. The one-million-copies distribution requirement in the definition of "Non-Microsoft Middleware Products" is reflective of the treatment of middleware threats in this case because the district and appellate courts did not merely focus on any software with the potential to serve as a multi-purpose platform, but specifically focused upon middleware which could "gain widespread use based on its value as a complement to Windows." Findings of Fact ¶ 69; see also id. ¶¶ 72 (describing Navigator's widespread adoption after its release), 76 (describing Java's inclusion in Navigator). The products upon which Judge Jackson focused in imposing liability were not merely middleware, but were middleware threats, because of their popular use, platform capabilities, and their ensuing ability to reduce the applications barrier to entry. Findings of Fact ¶¶ 69-78.

Additionally, it is noteworthy that the term "Non-Microsoft Middleware Product" is utilized in only one section of Microsoft's proposed remedy, § III.H. This portion of Microsoft's remedy proposal requires Microsoft to configure its operating system products so as to permit the removal of end-user access to, and certain "automatic invocations"*fn32 of "Microsoft Middleware Products," as well as "Non-Microsoft Middleware Products." SRPFJ § III.H.1. This portion of the SRPFJ also provides for the replacement of "Microsoft Middleware Products" with "Non-Microsoft Middleware Products" in very specific instances. Id. § III.H.2. Because this portion of Microsoft's proposed remedy requires Microsoft to undertake the redesign of its own product, Jones ¶ 119, the one-million-copies threshold relieves Microsoft of the obligation to redesign its product to accommodate a particular piece of software with extremely limited use. Elsewhere in Microsoft's remedy proposal, where there is no burden upon Microsoft to redesign its product, the one-million-copies distribution threshold does not apply. See, e.g., SRPFJ § III.A, C.

To emphasize the limited relevance of the one-million-copies threshold, the Court reiterates that Microsoft's remedy proposal primarily utilizes the term "Non-Microsoft Middleware," which does not incorporate any minimum threshold for distribution, in its extension of protection to products well beyond the types of products that were addressed during the liability phase. This lack of a threshold leads to the inclusion in the remedy of virtually any nascent "middleware" technology, regardless of its popularity or promise of success. Therefore, the key distinction between the two definitions is rooted in the liability determination, as well as practical considerations attendant to the imposition of design obligations upon Microsoft.

iii. "Microsoft Middleware Product" in the SRPFJ

In contrast to the broad definitions of "Non-Microsoft Middleware" and "Non-Microsoft Middleware Products," the term "Microsoft Middleware Product" is defined according to a specific set of existing Microsoft functionalities, as well as future Microsoft functionality. The existing set of functionalities which are included in "Microsoft Middleware Product" are those provided by Internet Explorer, Microsoft's Java Virtual Machine, Windows Media Player, Windows Messenger, Outlook Express, and their successors in Windows. SRPFJ § VI.K.1. The future technologies captured by the definition of "Microsoft Middleware Product" encompass software included in Windows that provides the functionality of Internet browsers, email client software, networked audio/video client software, and instant messaging software. Id. § VI.K.2. Other future technologies captured in the definition of "Microsoft Middleware Product" are those functionalities which are both distributed as part of Windows and distributed separately from Windows by Microsoft, trademarked by Microsoft, and which compete with third-party middleware products. Id.

"Microsoft Middleware Product" extends well beyond the Microsoft counterparts to the two non-Microsoft technologies which were primarily at issue in the liability phase of this case (Java and Navigator) to include media playback technology, which was addressed briefly during the liability phase, Findings of Fact ¶ 78, and to govern the Microsoft counterparts to other well-recognized potential middleware threats to Windows' dominance, such as email client software and instant messaging software. See SRPFJ § VI.K. The term "Microsoft Middleware Product," as defined in the SRPFJ, focuses upon software technologies which have been incorporated or "integrated" into the Windows operating system, in reflection of the fact that the two technologies principally at issue during the liability phase were mirrored by Microsoft technologies that had been incorporated into Windows. See Findings of Fact ¶¶ 133, 155, 397-98. The focus on technologies incorporated into Windows further reflects the fact that Microsoft software technologies that have never been part of Windows fall outside of Microsoft's monopoly product, which, of course, is the focus of this proceeding.

iv. "Microsoft Middleware" in the SRPFJ

In portions of Microsoft's proposed remedy, there is a need to identify the specific code in Windows. Hence, Microsoft's remedy proposal uses the term "Microsoft Middleware," which is largely reflective of the definition of "Microsoft Middleware Product," but which is further limited to the code separately distributed and trademarked or marketed as a major version of the Microsoft Middleware Product. SRPFJ § VI.J. The term "Microsoft Middleware" is used sparingly in Microsoft's remedy proposal, with its most significant and prominent use arising in conjunction with a provision that requires Microsoft to disclose very specific APIs and related technical information. Section III.D of Microsoft's proposed remedy requires Microsoft to disclose all of the interfaces relied upon by "Microsoft Middleware" to obtain services from Windows. Id. § III.D. Because "Microsoft Middleware" is defined as functionality included in or "integrated" into Windows, § III.D requires that Microsoft draw distinctions between portions of Windows in order to identify the APIs relied upon by one portion-the middleware portion-to obtain services from the remaining portion of Windows. See id. §§ III.D, VI.J. In order to distinguish between these two portions of Windows that coexist within the same piece of software, the definition of "Microsoft Middleware" identifies the relevant software by its code. The separate distribution requirement, along with the requirement that the distributed software is a "major version of [the] Microsoft Middleware Product," ensures that the code is easily distinguishable from the remainder of Windows. Id. § VI.J; Tr. at 5166 (Jones) ("We look at those components and we basically . . . we draw a lasso around them and look at everything going out and everything coming in.").

Plaintiffs' witnesses disagreed with these limitations, arguing that because the determinations to distribute separately and to market as a major version or trademark rest in Microsoft's discretion, Microsoft has the ability to manipulate and control which code falls within the definition. See, e.g., Ledbetter ¶ 153; Tr. at 1160-61 (Tiemann). These arguments fail to recognize the need for precision in identifying a distinction between "Microsoft Middleware" and the remainder of Windows. Plaintiffs do not offer an alternative method for identifying the specific code that constitutes "Microsoft Middleware," or some similar portion of Windows, nor do Plaintiffs establish that such precision is unnecessary. Rather, Microsoft presents ample evidence that, without a method by which to identify the specific code to be treated as the middleware portion of Windows, it cannot undertake the disclosure obligations which would be required by § III.D of Microsoft's remedy proposal (nor by § 4 of Plaintiffs' remedy proposal). See Appendix A, Part VI. By providing a mechanism by which to identify the specific pieces of Windows code which constitute the relevant middleware portion of Windows, Microsoft's definition identifies the otherwise imperceptible boundary between "middleware" and "operating system." Although the definition of "Microsoft Middleware" proposed in the SRPFJ is noticeably more circumscribed than the equivalent definition in Plaintiffs' proposed remedy, discussed infra, these limitations serve to provide bright lines by which Microsoft can determine what portions of Windows code are affected by the remedy.*fn33

Plaintiffs' witnesses further criticized Microsoft's method for identifying these portions of code on the ground that Microsoft retains too much power to control which code falls within the definition of "Microsoft Middleware." See, e.g., Kertzman ¶ 68; Ledbetter ¶ 153; Richards ¶ 87; Shapiro ¶ 195. These criticisms ignore the economic forces which countervail the likelihood that Microsoft will manipulate its products to exclude specific code from the definition. For example, Plaintiffs' witnesses specifically noted that Microsoft may simply opt not to distribute code separately. See, e.g., Kertzman 68; Ledbetter ¶ 153. Microsoft often distributes separately certain technologies which are included in new releases of Windows because such distribution enables users of previous Windows versions to take advantage of the latest improvements to these technologies. See Jones ¶ 61; Poole ¶ 76. Such distribution benefits Microsoft, as it permits Microsoft to continually improve the quality of its products, even after they are sold, and to expand the user base of new technology without waiting for consumers to purchase an entirely new operating system. Therefore, if Microsoft determines not to distribute separately certain portions of code, it will deny itself the benefits of such distribution. Likewise, if Microsoft should choose to distribute a product which is not a major version of Internet Explorer, Microsoft's Java Virtual Machine, Windows Media Player, Windows Messenger, or Outlook Express, and Microsoft chooses not to trademark the separate distribution in an effort to avoid inclusion in the definition of "Microsoft Middleware," see SRPFJ § VI.J and K, Microsoft will sacrifice the advantage gained by having a trademarked product in the marketplace. Plaintiffs have not offered credible evidence indicating that Microsoft is likely to sacrifice the advantages of trademarking and separate distribution in order to circumvent the terms of the remedy in this case.*fn34 Accordingly, the Court accords Plaintiffs' complaint little weight.

b. "Middleware" and Related Definitions in Plaintiffs' Proposal

i. "Middleware" in the SPR

Reflective of their complaint that Microsoft's treatment of middleware is too narrow, Plaintiffs' remedy proposal incorporates into "middleware" a far broader set of products and functions. Plaintiffs define "middleware" as

software . . . that operates directly or through other software within an Operating System or between an Operating System (whether or not on the same computer) and other software (whether or not on the same computer) by offering services via APIs or Communications Interfaces to such other software, and could, if ported to or made Interoperable with multiple Operating Systems, enable software products written for that Middleware to be run on multiple Operating System Products.

SPR § 22w. As a result, middleware, according to Plaintiffs' definition, is virtually any block of software code which exposes even a single API.*fn35 Bennett ¶¶ 30, 35-36; Madnick ¶ 136; Tr. at 4592-93, 4889 (Gates); Def. Ex. 1530 at 61 (Greene).

Very small blocks of software code can be considered to be separate pieces of middleware pursuant to Plaintiffs' proposed remedy. As a result, individual files or even parts of files within Windows may be said to be middleware. See Gates ¶ 165; Tr. at 6042-43 (Madnick). For each action mandated or restricted by Plaintiffs' proposed remedy where the term "middleware" appears, see, e.g., SPR §§ 2.c, 5, 10, 11,*fn36 or is incorporated into the definition of another term, see, e.g., SPR § 22.x, such obligations apply to very small blocks of software code, rather than to software code that is generally regarded as a software product. In this regard, Plaintiffs' definition of "middleware" is described as highly "granular," Gates ¶ 165; Madnick ¶ 152, as it separates middleware into extraordinarily fine "grain." See Bennett ¶¶ 30, 35-36.

Rather than focus on the platform potential of software, Plaintiffs focus exclusively upon the ability of a piece of software to expose even a single API. Nearly any software can expose a few APIs, yet not all software that exposes a few APIs carries the potential to serve as a platform for applications, let alone the potential to evolve into a platform that can dissipate the applications barrier to entry protecting Microsoft's PC operating system monopoly. See Bennett ¶¶ 30, 35-36; Madnick ¶¶ 136-39; Tr. at 841-42 (Ashkin); Tr. at 619-20 (Richards). Plaintiffs fail to adduce evidence sufficient to establish that these various pieces of software, which often lack robust platform capabilities but expose at least one API, have the capacity to lower the applications barrier to entry, and thereby promote competition in the monopolized market. As a result, to label such software as "middleware" is not consistent with the manner in which middleware was discussed during the liability phase of this case. Rather, the relevant middleware is the software that runs on desktop versions of Windows and other PC operating systems and carries the potential to serve as a general-purpose development platform. It is this platform trait which makes the software a middleware threat because the platform capability of the middleware competes with the platform capability of Windows. More importantly, because Plaintiffs' definition of "middleware" is over-inclusive and does not reflect the presence of a genuine platform threat, the Court cannot find that remedial provisions which address virtually any software which exposes one or more APIs will benefit competition in the relevant market.

ii. "Microsoft Middleware Product" in the SPR

As noted above, Plaintiffs' remedy proposal utilizes the term "Microsoft Middleware Product" to refer to a class of Microsoft software. Plaintiffs' remedy proposal provides two different ways in which a particular piece of software may fall within the parameters of a "Microsoft Middleware Product."*fn37 The first part of the definition of "Microsoft Middleware Product" enumerates an expansive list of functionalities, each of which alone constitutes a separate "Microsoft Middleware Product." SPR § 22.x.i. The latter portion of the definition requires that, in order to be a "Microsoft Middleware Product," the product must be middleware (according to Plaintiffs' definition) that is or has been distributed by Microsoft separately from Windows within the past three years and provides a functionality similar to that provided by the middleware of a Microsoft competitor. Id. § 22.x.ii.

Addressing first the list of functionalities proffered in the definition of "Microsoft Middleware Product," the Court finds that the functionalities which are included in the definition of "Microsoft Middleware Product" expand far beyond those provided by the middleware principally addressed by the district court during the liability phase. Plaintiffs have not presented evidence regarding the platform capabilities of many of the functionalities listed in their definitions of "middleware" and "Microsoft Middleware Product." With regard to those few functionalities that Plaintiffs did address during the evidentiary hearing, the Court is not satisfied that Plaintiffs have presented evidence to establish that even these functionalities possess platform potential akin to that possessed by Navigator and Java. See Elzinga 4 135; Gates ¶¶ 147-49; Madnick ¶¶ 13639, 212; Tr. at 841-42 (Ashkin); Tr. at 3307 (Shapiro).

With regard to the latter portion of the definition of "Microsoft Middleware Product," the Court finds that the incorporation of Plaintiffs' definition of "middleware" into this portion of the definition renders "Microsoft Middleware Products," like "middleware," to be virtually any portion of a Microsoft software product that exposes even a single API and is presently distributed separately or has been distributed separately from Windows by Microsoft within the past three years. See Bennett ¶¶ 30, 35-36; Madnick ¶ 45. Once again, the fact that a software product or a piece of a software product exposes APIs does not itself equate with a conclusion that the software product holds the potential to serve as a platform for applications, let alone the potential to evolve into a platform with the capacity to reduce the applications barrier to entry. See Bennett ¶¶ 30, 35-36; Madnick ¶¶ 136-39; Tr. at 841-42 (Ashkin); Tr. at 619-20 (Richards). As a result, there is no basis for a finding that inclusion in the remedy of any separately distributed Microsoft software product which exposes just a single API will enhance competition in the monopolized market.

Aside from Plaintiffs' inclusion in the most fundamental definitions of the proposed remedy software products and portions thereof which have not been shown to possess the potential to erode the applications barrier to entry, Plaintiffs' definitions of "middleware" and "Microsoft Middleware Product" suffer from even greater infirmities when the use of the definitions in the remedy proposal is examined. Plaintiffs' remedy proposal, like Microsoft's proposal, mandates the disclosure of APIs and related technical information relied upon by some form of Microsoft middleware technology to interoperate with the Windows operating system. Compare SPR § 4, with SRPFJ § III.D. However, Plaintiffs' remedy proposal, in defining "Microsoft Middleware Product" through the identification of a particular functionality, is insufficiently precise to provide Microsoft with notice as to what portions of its Windows product are implicated in the provision.

For example, "media creation, delivery and playback software" is identified as a kind of "Microsoft Middleware Product."*fn38 SPR §§ 4, 22.x.i. Will Poole, a Microsoft Vice President responsible for the Windows New Media Platforms Division, pointed out that it is very difficult to try to "draw a box around the components of Microsoft's . . . multimedia software" because "many different areas of the operating system handle multimedia content." Poole ¶ 83. As Mr. Poole attested, it is unclear whether "the basic APIs that enable an application or the operating system to play an `alert' sound . . . are part of Microsoft's `media creation, delivery and playback software.'" Id.*fn39 Plaintiffs have not established that there is any clear definition or consensus in the industry, or even within Microsoft, as to what portions of Windows would constitute "media creation, delivery, and playback software" and what would be considered to be simply part of the "operating system" functionality, i.e., "Microsoft Platform Software."*fn40 As a result, the definition of "Microsoft Middleware Product" provided in Plaintiffs' remedy is ambiguous, leaving Microsoft without clear guidance, and the Court with compliance issues, as to what is expected for compliance with the API disclosure portion and other portions of Plaintiffs' proposed remedy.*fn41

3. New Technologies

Plaintiffs have also identified certain technologies which, prior to this remedy proceeding, had not been addressed by the district and appellate courts in detail in conjunction with this case. Plaintiffs identify these technologies as the new frontier in "middleware platform threats" and, therefore, seek to include these technologies in the definition of "middleware" and related definitions. In the paragraphs below, the Court examines four categories of technologies in order to determine if Plaintiffs' proposal to encompass these technologies within the remedy is appropriate: (1) network and server-based applications; (2) interactive television middleware and set-top boxes; (3) handheld devices; and (4) Web services.

a. Server/Network Computing

In large computing networks, PCs are often known as "clients," and the large computers used to store data and run centralized applications are known as "servers." Madnick ¶¶ 42-3. Traditionally, the majority of software applications have been located on the PC, but in the network context, applications may reside on the server. Ledbetter ¶¶ 16-17, 21. Applications residing on the server call upon server operating systems to provide functionality, which is ultimately executed "for" a client PC. Id. ¶ 50. Most client computers are PCs that run some version of the Windows operating system. Madnick ¶ 44. The operating systems used on servers, however, are more diverse, such that it is common to have a heterogeneous network, meaning a network "contain[ing] a combination of clients and server operating systems from different vendors." Short ¶ 22; see also Ledbetter ¶ 64; Madnick ¶ 44. Heterogeneous networks are the norm, rather than the exception. Madnick ¶ 53; see also Ledbetter ¶ 64.

Heterogeneous networks have the ability to function because server operating systems are capable of "interoperat[ion]" with clients running a variety of operating systems. Ledbetter ¶ 49. In general terms, when two devices or systems have the ability to "interoperate" they can exchange information and use the information that has been exchanged. Ledbetter ¶ 65; Madnick ¶ 46. The concept of interoperability encompasses a continuum; it is not an absolute standard. Madnick ¶ 46, Tr. at 7108-09 (Bennett); Tr. at 5782-83 (Madnick); Tr. at 5477 (Short); see also Ledbetter ¶¶ 65-66; Tiemann ¶ 179. For this reason, interactions among computer systems may be classified in terms of how "tightly" or "fully" they interoperate. Madnick ¶¶ 55, 61; see also Ledbetter 1 66; Madnick ¶ 119; Short ¶ 16.

Clients and servers in a homogeneous network interoperate differently than clients and servers in a heterogeneous network. Madnick ¶¶ 61-68. For two computers to interoperate, they must have compatible software installed. Therefore, interoperation is most easily accomplished by computers in the same "hardware-software platform family." Madnick ¶ 61. For example, "a Sun workstation and a Sun server, both running Solaris on SPARC processors" can be said to be in the same "hardware-software platform family" and, therefore, share many "common points of reference" such as file systems and interfaces, making interoperation relatively straightforward and easy to accomplish. Id. When the client and server versions of the operating systems are built on a common base of code, with a very high degree of overlap, applications that run on the client version generally will run on the server version of the same operating system. Id. ¶ 64. In these homogeneous contexts, the client version of the operating system generally includes "built-in" or "native" software that enables the client computer to connect to a server running the same operating system. Id. 64.

In the more common model, a heterogeneous network, interoperation is more complex because of basic differences between types of hardware and operating systems. Id. ¶ 65. For example, "the Mac OS, NetWare, variants of Unix, and Windows all store files in different ways and track different file characteristics." Id. There are a variety of methods used to overcome differences between client and server capabilities. One such method is the identification of a common "language" or a communications "protocol"*fn42 which both pieces of the network understand or support "natively," meaning without the addition of software code. See Madnick ¶¶ 68-71; see also Short ¶¶ 36-38. Another method involves adding software to the server to make the client computer "think" it is communicating in a homogeneous network. Madnick ¶¶ 68-75; see also Short ¶¶ 44-49. The software added to the server, if interoperating with a Windows client for example, will enable the server to provide services to the Windows client in the same manner as would a Windows server. Madnick ¶¶ 73-74. Yet another method of interoperation in a heterogeneous network involves the addition of software code to the client which enables the client to communicate more effectively with the server. Id. ¶¶ 68, 76-82; see also Short ¶¶ 39-43. When software is added to the client computer to enable interoperation, the client software relies on the client operating system's APIs in the same manner as an ordinary application. Madnick ¶ 80.

In each of these configurations, successful interoperation can be achieved. Nevertheless, because of the complexity of modern software, perfect interoperation between different types of hardware and software products (a heterogeneous network) is largely aspirational. Id. ¶¶ 88-89, 97; see also id. ¶¶ 46, 82; Gates ¶ 305. Said otherwise, even with these methods of facilitating interoperation, it is rare that the result will be identical to what would have been achieved in a homogeneous network, because the features of the various pieces of the network will handle functionality in different ways. See Madnick ¶ 82.

Server operating systems expose APIs for use by applications and, on behalf of those applications, call on PC (client) operating systems to provide basic functions of the PCs connected to the network. Ledbetter ¶ 47. Software developers are increasingly writing programs that rely, or "call," on APIs exposed by server operating systems such that the server operating system provides the "platform" for applications. Id. ¶¶ 47-48; Green ¶ 76; Tr. at 1508-09 (Ledbetter). Ultimately, the application running on the server operating system will run "for" the client PC in a manner similar to that which would exist if the application were running directly on the client. Tr. at 1507 (Ledbetter); see also Ledbetter ¶¶ 47-48; Tiemann 1 127.

Dr. Carl S. Ledbetter, Senior Vice President, Engineering/Research and Development, and Chief Technology Officer for Novell, Inc.,*fn43 Ledbetter ¶ 1, testified on behalf of Plaintiffs that because most server operating systems are capable of interoperating "effectively with a variety of client PC operating systems and other different server operating systems . . . applications written to invoke the APIs of a network operating system (instead of the APIs of a particular PC operating system) can be shared among client PCs that do not themselves employ the same operating system." Id. 49. Dr. Ledbetter theorized that the brand of PC operating system will decrease in importance as software developers begin to write programs for APIs exposed by server operating systems, rather than for the APIs exposed by PC operating systems. Id. ¶ 50. Based upon this view, Dr. Ledbetter predicted that "[s]erver operating systems, if they are a platform for enough applications and if they function efficiently with non-Microsoft client PCs, could enable consumers to receive the applications they want using desktop PCs that run non-Microsoft operating systems." Id. With this prediction, Dr. Ledbetter invoked the potential of server/network computing to challenge the applications barrier to entry in a manner similar to that of Navigator and Java, as discussed throughout the liability phase. Ledbetter ¶ 50; see also Tiemann ¶ 131; Shapiro ¶ 172.

Central to the success of server/network computing is the ability of heterogeneous networks to interoperate successfully. Within these heterogeneous networks, Windows operating systems account for the vast majority of PC clients, while a wide mix of server operating systems are utilized, with most servers employing two or more different server operating systems. Madnick ¶ 53; see also Gates ¶¶ 92-94; Short ¶ 28. Client-to-server interoperation is enabled by disclosure of the interfaces exposed by Windows clients that are required by a non-Windows server to make its functionality available to those clients. Short ¶ 34. In this regard, the "tools" of client-to-server interoperation are APIs, communications protocols, and related technical information. Tr. at 5486 (Short).

b. Set-Top Boxes and Interactive Television Software

A set-top box is a limited-function computer attached to a television for purposes of enabling interactive television technologies. Kertzman ¶ 4. In terms of functionality, interactive television technology generally involves the provision of a range of more traditionally television-oriented services, such as the ability to order "video-on-demand," an on-screen television guide, and the ability to interact with particular television programs, as well as a range of functionality typically associated with personal computer use, such as email, Internet access, instant messaging, and the provision of streaming audio and media through a personal computer media player. Kertzman ¶ 3. The set-top box is linked, at present, to a server usually located at the cable or satellite television provider. Id. ¶ 4. The server software residing at the cable company powers the majority of the interactive television content, sending commands to the set-top "clients." Id. ¶ 23. These servers also download a small piece of software to each client as it connects to the server. Id.*fn44 At present, interactive television software has not been deployed to the personal computer. Tr. at 2091-92 (Kertzman). Rather, the software is currently distributed to companies like cable, satellite, and telephone companies that provide multichannel television programming to consumers for use on set-top boxes and is not distributed to traditional OEMs as that term has been used in this litigation. See id.

Mitchell Kertzman, the Chief Executive Officer of Liberate Technologies, a company which supplies interactive television software, Kertzman ¶ 1, testified that interactive television software exposes APIs, enabling it to serve as a platform for a number of applications typically associated with the personal computer, such as email, instant messaging, and streaming audio and video. Id. ¶ 29. Mr. Kertzman testified that his company's interactive television software is cross-platform and, hence, can run on multiple operating systems. Id. ¶ 28. Mr. Kertzman asserts that because of its platform capabilities interactive television software has the potential to pose a "platform threat" to Windows.*fn45 Kertzman ¶ 33. This platform threat, theorizes Mr. Kertzman, will result from the ability of the interactive television software to attract developers to write applications for the platform it provides, which can be ported to any operating system. In this regard, Mr. Kertzman does not distinguish precisely between whether the "platform" is provided by the portion of the software which runs on a server or the portion of the software which is downloaded to the client set-top box. See Tr. at 2111-13 (Kertzman).

c. Handheld Devices

The term "handheld devices" is a largely descriptive term which refers to a category of computing devices that perform many of the functions of an ordinary personal computer but are much smaller, such that they are "hand held." See Mace ¶ 13. This category can also include so-called "smart phones," which are devices that combine the PC-like capabilities of handheld devices and mobile telephone technology. Id. ¶ 21. Handheld devices have been "commercially successful" since approximately 1996, when the original "Palm Pilot" handheld device was introduced by Palm, Inc. ("Palm"). Id. ¶ 8. As six years have passed since handheld devices achieved "commercial success[]," id., the technology is not nascent. A handheld device's core use is to manage a user's personal information, such as calendar and address book functions, electronic mail, and Internet browsing. Id. ¶¶ 12, 24. Because the capabilities of handheld devices generally overlap with those of a personal computer, the vast majority of handheld device users "synchronize" information contained in their handheld device with information contained in their personal computer or on a server. Id. ¶¶ 25-26. Through synchronization, the handheld device automatically merges its information with information stored on a PC or server. Id. ¶ 25. Handheld devices have already gained widespread popularity. Palm manufactures the most popular operating systems for handheld devices, with a United States market share of approximately eighty percent. Tr. at 1900 (Mace).

Testifying on behalf of Plaintiffs, Michael Mace, Chief Competitive Officer of PalmSource, Inc., a wholly owned subsidiary of Palm,*fn46 Mace ¶ 1, attested that he anticipates that the continued advancement of the handheld device will result in the replacement of the personal computer by the handheld device. Id. ¶ 15. Mr. Mace explained that he has seen "interest among PC software developers in converting their software" to run on the Palm operating system for handheld devices, id. ¶ 17, and that there are more than 13,000 software programs available to run on the Palm operating system alone. Id. ¶ 12. In this regard, Mr. Mace emphasized that although, in his view, the PC is not "obsolete," he believes that "handheld sales are already starting to reduce the growth of PC sales, and . . . they will eventually replace many personal computers." Id. ¶ 18. Mr. Mace did not offer any testimony regarding plans to port handheld device operating systems to personal computers, nor did he testify that handheld device synchronization software has any platform capabilities.

Microsoft recently entered into the handheld market with the "Pocket PC." Id. ¶ 19. Mr. Mace expressed concern over Microsoft's entry into the market. See id. ¶ 35. Mr. Mace testified at length regarding Palm's inability to reach an agreement with Microsoft regarding "cooperative access to Microsoft's NET technologies." Id. ¶ 70; see generally id. ¶¶ 55-72. In this regard, Mr. Mace accused Microsoft of "manipulat[ing]" NET and raised an additional concern "about what other things Microsoft could do to interfere with our business." Id. ¶ 74. In particular, Mr. Mace asserted that "Microsoft software standards could be manipulated to degrade the performance of our products or disable them." Id. ¶ 76. To support this contention, Mr. Mace described a series of unsuccessful negotiations between Microsoft and Palm surrounding the availability of the .Net platform for the Palm operating system. Id. ¶¶ 55-72. The negotiations failed because Palm perceived that the terms Microsoft sought to impose would threaten to turn Palm customers into Microsoft customers if ISVs began to write to Microsoft technology supported by Palm, rather than the Palm operating system. Id.

Palm was intimately involved in the inclusion of handheld device-related software in Plaintiffs' proposed remedy and stands to benefit competitively from such inclusion. Tr. at 1866-90 (Mace). For example, in his direct testimony, Mr. Mace recounted Palm's desire that IE be converted to run on the Palm operating system, and Microsoft's refusal to do so. Mace ¶¶ 87-89. Palm views this litigation as a means by which to gain access to the source code for IE and thereby create a version of IE for the Palm operating system. Tr. at 2480-84, 2491 (Mace).

d. Web Services

Web services are almost universally viewed as the new frontier in computing, providing a new computing paradigm. Allchin ¶ 14. Because "Web services" are new and emerging, and in many ways are still largely conceptual, there are multiple understandings within the industry as to what constitutes "Web services." The intangible nature of Web services, combined with the substantial disagreement about the precise parameters of the same make it extremely difficult to define the term. Based upon the evidence provided by the parties in this proceeding, the Court can only characterize Web services in somewhat general terms.

The concept of Web services concerns the exchange of information and functionality from one computing device to another through a defined set of industry standard interfaces. See Allchin ¶ 41; Gates ¶ 40; Tr. at 2792 (Schwartz). By using Web services built on one of a number of standard protocols, applications connected to each other via the Internet or other networks can share data, as well as invoke functionality supplied by one another-interoperate-without regard as to how they were built or on which operating system they are running. Allchin ¶ 42; see also Def. Ex. 1398 (Anne Thomas Manes, Enabling Open, Interoperable, and Smart Web Services[:] The Need for Shared Content, (Sun Microsystems, Inc.) March 2001). Web services are server-based applications that can be accessed directly by other software programs, as well as by the consumer through a variety of devices, including the PC, cellular phone, and handheld device. Allchin ¶¶ 43-44, 65; Borthwick ¶ 73. Interoperability from server to server, and between servers and non-PC devices, is considered by many to be fundamental to the functioning of Web services. Allchin ¶¶ 53, 64; Schwartz ¶ 164; see also Richards ¶ 98.

Microsoft has given the name ".NET" to its "emerging platform for Web services." Id. ¶ 43. Microsoft's .NET vision encompasses software for building, deploying, operating, integrating, and consuming Web services. Id. ¶ 49. William H. Gates, III, Microsoft's Chairman of the Board and Chief Software Architect, Gates ¶ 1, characterized Microsoft's efforts in the Web services area as a "bet the company" initiative. Tr. at 4562 (Gates). On behalf of Microsoft, Dr. Allchin described the "core" of .NET as "XML," a format for describing data. Id. ¶ 55. Additional industry standards such as SOAP, WSDL and UDDI "collectively round out the underpinnings for .NET." Id. ¶ 57. These standards, in Microsoft's view, will enable the ready interoperation of a wide variety of computing devices. Id. ¶¶ 51, 54, 61-62.

Not surprisingly, Microsoft is not alone in having a vision for Web services. Microsoft's .NET initiative and Sun's Java platform represent competing and "fundamentally different" visions of the ideal way to develop and deliver distributed business applications. Id. ¶ 64; see also Schwartz ¶ 57. Microsoft's .NET Framework is one element of Microsoft's .NET initiative. Allchin ¶ 67. Visual Studio.NET is a set of tools that software developers can use to write software programs that will run within Microsoft's .NET Framework. Id. ¶ 68.

The Chief Strategy Officer for Sun Microsystems, Inc., Jonathan Schwartz, testifying on behalf of Plaintiffs, Schwartz ¶ 1, theorized that "[i]f the most popular applications are delivered as Web services, instead of [as] stand-alone PC applications, the applications barrier protecting Windows could be substantially eroded." Id. ¶ 36. Mr. Schwartz further testified that Web services, in his view, have the capacity to challenge the popularity and the necessity of the PC. In this regard, Mr. Schwartz theorized that the increasing residence of Web service components "on servers that can be accessed with a variety of client devices" renders Microsoft's desktop operating system less necessary to the ability to run the desired applications. Id. ¶ 37; see also id. ¶ 38; Borthwick ¶ 74.

John Borthwick, a Vice President at America Online Inc. ("AOL") Advanced Services, Borthwick ¶ 1, articulated a fear that Microsoft will use its present monopoly position in the market for Intel-compatible PC operating systems to "tilt end-users towards Microsoft's services" and thereby induce software developers "to develop their [W]eb services to conform exclusively to the .NET platform." Id. ¶ 77; see also id. ¶¶ 76-85; Schwartz ¶¶ 111-12; 126. Mr. Borthwick's fear in this regard engenders a prediction that "as users become dependent on Microsoft's [W]eb services, Microsoft can ensure that they remain dependent on Windows XP and its subsequent updates" by "interfer[ing] with interoperation between its own platform software and rival servers, operating systems and hand-held devices" so as to ultimately "force users to purchase new iterations of Windows XP if they wish to access [W]eb services through their PCs." Borthwick ¶ 85; see also id. ¶¶ 98, 101, 103. Mr. Borthwick's concerns were echoed almost verbatim by Mr. Schwartz of Sun Microsystems. See Schwartz ¶ 126 ("[B]y widely distributing its NET platform with its ubiquitous operating system and other products . . . Microsoft has the power potentially to tip the market for Web services platform in favor of .NET"). In essence, both Messrs. Schwartz and Borthwick expressed concern that Microsoft has the power "to use its Windows operating system to thwart platform competition in the market for [W]eb services." Borthwick ¶ 103; see also id. ¶¶ 108; 114; Schwartz ¶ 134. Mr. Schwartz built upon Mr. Borthwick's fear by asserting that, in addition to Microsoft's dominance in the market for PC operating systems, Microsoft's "presence in the server software market allows it to exert control over servers hosting or running Web services in ways that will protect the position of Windows." Schwartz ¶ 129.

C. Conclusions Regarding Scope of the Remedy

Plaintiffs' best theory to justify inclusion of the above-described products or devices in an appropriate remedy is to identify them as types of "middleware," which have the capacity to serve as alternative platforms, running on top of the operating system, in the same way as Java or Navigator. With limited exceptions, Plaintiffs are unsuccessful at pounding these square pegs into the round holes of liability in this case. Plaintiffs' search for middleware threats of the same type or class as Navigator and Java takes them outside of the realm of software applications written for PCs, to include software which is running predominantly on non-PC devices. This fundamental aspect of the theory is not itself flawed, so long as the technologies have the potential to interact with the PC operating system in such as way as to function as "middleware," consistent with the use of that term in the liability phase. Microsoft has steadfastly maintained that none of these technologies is a proper subject of the remedy in this case because they are not truly "middleware" as that term was used in the liability phase. Therefore, argues Microsoft, these technologies are unrelated to the findings of liability affirmed by the appellate court and have no place in this proceeding.*fn49

Although "precedents . . . uphold equity's authority to use quite drastic measures to achieve freedom from the influence of the unlawful restraint of trade," such measures are justified only where "the required action reasonably tends to dissipate the restraints." Bausch & Lomb, 321 U.S. at 726, 64 S.Ct. 805. The Court finds that, of the new "middleware" or "platform threat" technologies identified by Plaintiffs, only one of the four-server/network computing-has been shown to presently have a reasonable possibility of "dissipat[ing] the restraints" on trade imposed by Microsoft. Id. Although this technology does not function precisely as "middleware" has throughout this proceeding, the platform threat it poses to Microsoft's dominance in the monopoly market is both real and similar to the threats posed by Navigator and the Java technologies. Zenith Radio, 395 U.S. at 132, 89 S.Ct. 1562. In contrast, the theories of dissipation of the restraints on trade which Plaintiffs utilize to justify inclusion in the remedy of the remaining three of these four technologies, in their present state,*fn50 are fundamentally flawed.

1. Server/Network Computing

Plaintiffs offer a strong, though still imperfect, argument for the inclusion of protection for technologies relating to network and server-based applications. Plaintiffs neither allege nor present evidence that these technologies will function as middleware in the traditional manner-meaning that the software physically resides on the PC and functions as a platform for other applications. See supra Part III.B.2.a. Therefore, these technologies lack one of the defining characteristics of middleware as it has been discussed in this case thus far. Notwithstanding this fact, networks and server-based technologies do have the capacity to function in a manner similar to that of traditional middleware by providing a layer between the operating system and the top-level applications. See id.; see also supra Part III.B.3.a.

In this model, personal computers, known in this context as "clients," are linked electronically to a central computer known as a "server" such that they form a "network." The server runs a "server operating system" which exposes its own APIs and, therefore, is capable of supporting software applications such that a user can access the application through the client PC. See supra Part III.B.3.a. Plaintiffs argue that in this configuration the server operating system plays the role of traditional middleware because it provides a platform for applications other than the PC operating system. Because server operating systems have the ability to interact or "interoperate" with multiple PC operating systems, an application written to a single server operating system can then be present for use by a client PC without regard to the type of PC operating system on the client. Id. In this scheme, the server operating system parallels and, indeed, resembles the more traditional middleware that was the focus of liability because it provides a platform for applications, as discussed supra Part III.B.2.a.

Given the Court's conclusion that servers should be included, the remedy in this case will provide substantial protection for server/network computing by requiring Microsoft to disclose technical information relating to communications protocols which are "natively" supported by Windows. See infra Part IV.E.2. The disclosure of this information will significantly advance the ability of non-Microsoft server operating systems to interact with client PCs running Windows. Such assistance is appropriate as it looks toward the new model of the "platform threat" and seeks to ensure that the ill effects of Microsoft's conduct are not felt in this related area of the industry. See Nat'l Soc'y of Prof'l Eng'rs, 435 U.S. at 698, 98 S.Ct. 1355; Paramount Pictures, 334 U.S. at 148, 68 S.Ct. 915.

In addition, because server operating systems provide a platform which "competes" with Microsoft's PC operating system to host applications for the PC, much in the way traditional middleware provides a platform and, thereby, competes with Microsoft's PC operating system, the Court's remedy affords vendors of server operating systems some protection from retaliatory action by Microsoft. See infra Part IV.D. Likewise, the Court's remedy provides similar protection against Microsoft retaliation for software vendors who write software which runs "on" server operating systems "for" use on a PC. Id. This curtailing of Microsoft's conduct with respect to server/network computing addresses conduct closely related to the retaliatory conduct for which Microsoft has been held liable, so as to ensure that the "untraveled roads" toward illegal maintenance of a monopoly are not "left open." Int'l Salt, 332 U.S. at 400, 68 S.Ct. 12.

2. Set-Top Boxes and Interactive Television Software

In some respects, interactive television software can be likened to the middleware platform threats discussed earlier in this case, such as Navigator, because the technology offers a somewhat "new" capability, interactive television functionality and simultaneously serves as a platform for other functionalities such as email and Web browsing. See supra Part III.B.3.b. At present, however, unlike the middleware threat posed by Navigator, interactive television software does not reside on the PC, but instead is present predominantly on the server, with a small portion on the television set-top box. Id. Therefore, Plaintiffs' view of interactive television software as a "middleware platform threat" is based upon the presumption that the functionality presently residing on the set-top box will someday be ported from the set-top box*fn51 to run on desktop personal computers. This presumption is the fundamental flaw in Plaintiffs' argument.

The potential "threat" posed by interactive television software is almost entirely hypothetical. Id. There is insufficient evidence for the Court to conclude that interactive television software will be ported in the near future. Id. Similarly, there is insufficient evidence to support a conclusion that, if ported, such software will gain significant popularity. Id. As a result of this dearth of evidence, the Court concludes that the remedy in this case may be effective and appropriate without extending its protections to interactive television software as it exists today.

The Court observes, however, that should interactive television software develop in the manner predicted by Plaintiffs, it will likely be protected by portions of the remedy imposed by the Court which protect "Non-Microsoft Middleware." In other words, if interactive television software someday runs on Windows, which it does not presently do, and exposes a range of functionality through APIs, it will receive all of the protections afforded "Non-Microsoft Middleware" in the remedial decree imposed by the Court. Similarly, such technology will be eligible for treatment as a "Non-Microsoft Middleware Product," provided that it obtains a measurable level of popularity as software running on Intel-compatible personal computers to warrant treatment as a middleware platform threat. See supra Part III. B.2.a.ii; infra Part III.C.5. The Court further observes that if Microsoft were to respond to interactive television technology in a manner similar to its response to the previous middleware platform threats, namely by incorporating such technology into Windows and trademarking the same, interactive television software could receive the protection afforded by the limitations on Microsoft's conduct relative to "Microsoft Middleware" imposed by the Court's remedy described below.*fn52

3. Handheld Devices

In contrast to server/network computing, or even Plaintiffs' predictions regarding interactive television software, the technology associated with handheld devices has not been shown to have the potential to function in a manner similar to middleware consistent with the liability phase. See supra Part III.B.3.c. Plaintiffs advance four theories pursuant to which handheld devices pose a "platform threat to the Windows operating system." Pl. Prop. Findings of Fact ¶ 147. The Court rejects each of these theories as either logically flawed or unsupported by the evidence.

Relying predominantly upon Mr. Mace's prediction that handheld devices will eventually replace the personal computer, Plaintiffs first argue that this potential substitution of handheld devices in place of personal computers can be characterized as a "platform threat." Id. Even if the Court accepts Mr. Mace's prediction regarding the future success of the handheld device, Plaintiffs' theory that this replacement represents a "platform threat," as that phrase has been used throughout this proceeding, is flawed. The theory of the "platform threat" posed by middleware posits that the middleware has the potential to erode the applications barrier to entry such that the brand of the underlying operating system is of less importance. In contrast, Plaintiffs' first theory regarding the competitive significance of the handheld device does not envision a world in which the brand of the PC operating system lacks significance, but instead envisions a world in which the PC itself and, therefore, the operating system on which it runs lacks significance.*fn53

Direct competition between the handheld device and the personal computer does not establish that competition will increase in the market for Intel-compatible personal computer operating systems. Such competition instead provides only the possibility that sales of personal computers, and therefore, the number of personal computers running the Windows operating system, will decline. Plaintiffs have not offered evidence which shows that Microsoft's share of the market for Intel-compatible personal computer operating systems will simultaneously decline, or that a decline in PC sales generally will encourage other entrants into the market for Intel-compatible PC operating systems. See supra Part III.B.3.c. As a result, the Court finds that Plaintiffs' first explanation of the handheld device's relation to the remedy in this case is not only far removed from the theory of the "middleware platform threat" which gave rise to the liability in this case, but logically unsound.

Plaintiffs argue second that as handheld devices increase in popularity, attracting more software developers and potentially beginning to replace the personal computer, there is an "increas[ed] likelihood" that "a handheld device operating system developer would port it to run on Intelcompatible PCs." Pl. Prop. Findings of Fact ¶ 148. Plaintiffs offer no direct support for this theory. Plaintiffs do not offer testimony from or about any such "handheld device operating system developer" with an interest in porting the operating system to serve as an operating system for a personal computer. See supra Part III. B.3.c. Indeed, handheld devices have been "commercially successful" since at least 1996, and yet Plaintiffs do not offer any evidence which indicates that the operating systems on which the devices run will be ported to run on the PC. Id. Accordingly, the Court must reject Plaintiffs' second theory of relevance as entirely speculative and unsupported by fact.

Plaintiffs next assert that because handheld devices compete with PCs for the attention of software developers there will be a reduction in the number of applications written for the personal computer. Pl. Prop. Findings of Fact ¶¶ 149-50. This reduction, contend Plaintiffs, will directly reduce the applications barrier to entry. Id. While there is evidence that a great number of applications are written for the handheld device, see supra Part III.B.3.c, Plaintiffs have not presented evidence that there has been any decrease in the number of PC applications since the rise in popularity of the handheld device. In short, there is no evidence linking the number of applications written for handheld devices to a decrease in the number of applications written for the PC. Even assuming that the increase in popularity of the handheld device would result in a decreased number of PC applications, from this point Plaintiffs merely reassert a version of their first theory of relevance, arguing that this decrease in PC applications will "impact competition between handhelds and PCs." Pl Prop. Finding of Fact ¶ 150. As the Court concluded above, competition between handheld devices and PCs has not been shown to have any impact upon the market for PC operating systems. Plaintiffs also assert that a reduction in the number of PC applications will impact "competition among [operating system] manufacturers by reducing the Windows applications barrier to entry." Id. Plaintiffs fail to identify any evidence which supports this theory. See generally supra Part III.B.3.c. Mere reduction in the number of applications written for all PC operating systems has not been shown by Plaintiffs to reduce the applications barrier to entry. In sum, the Court rejects Plaintiffs' third theory of relevance regarding handheld devices as lacking entirely in factual support and logically flawed.

Lastly, Plaintiffs contend that the increasing popularity in handheld devices carries the potential to threaten Microsoft's monopoly in the market for Intel-compatible PC operating systems by creating a larger market and greater consumer demand for cross-platform middleware. See Pl. Prop. Finding of Fact ¶ 151. Plaintiffs do not offer any evidence, let alone economic analysis, that identifies a relationship between the market for handheld devices and the available and potential distribution channels of cross-platform middleware. See supra Part III.B.3.c. Because the Court cannot accept Plaintiffs' speculation that there exists such a relationship, the Court rejects Plaintiffs fourth theory of the relevance of handheld devices to the issue of remedy in this case.*fn54

Based on the foregoing, the Court rejects Plaintiffs' insistence that handheld devices need some form of protection by the remedial decree imposed in this case. Handheld devices did not play a role during the liability phase of this case, beyond exclusion from the relevant market, and they have not been shown to be relevant to the Court's task of terminating the illegal conduct, United Shoe, 391 U.S. at 250, 88 S.Ct. 1496, and restoring competition to the relevant market, Ford Motor Co., 405 U.S. at 573, 92 S.Ct. 1142. While the Court's ability to impose a remedy in an antitrust case is not "merely to end the specific illegal practices," Int'l Salt, 332 U.S. at 401, 68 S.Ct. 12, there is no authorization for the Court to "interfere with ordinary commercial practices." Bausch & Lomb, 321 U.S. at 728, 64 S.Ct. 805. Intervention into a market outside of and unrelated to the monopoly market is not justified merely because Microsoft has begun to compete in the new market and such competition is feared.

4. Web Services

The analysis of Plaintiffs' arguments relative to Web services is similar to the analysis applied to handheld devices. Plaintiffs attempt to relate the emerging area of Web services to this proceeding primarily by emphasizing the seemingly collective recognition in the industry that Web services comprise the new computing platform. See supra Part III.B.3.d. Yet the mere importance of Web services to Microsoft and the industry as a whole is not sufficient to justify extending the remedy in this case to regulate Microsoft's conduct in relation to Web services. Although Plaintiffs assume that Microsoft will engage in anticompetitive conduct in the future in conjunction with its participation in this emerging area of technology, this case cannot be used as a vehicle by which to fight every potential future violation of the antitrust laws by Microsoft envisioned by Microsoft's competitors. "[A] district court may not enjoin all future illegal conduct of the defendant, or even all future violations of the antitrust laws, however unrelated to the violation found by the court." Zenith Radio, 395 U.S. at 133, 89 S.Ct. 1562. The Court may only restrain commission of the unlawful acts and other related unlawful acts. Id.

The testimony offered by Plaintiffs regarding handheld devices and Web services-technologies which are largely unrelated to the findings of liability in this case-reflects a fear that Microsoft will parlay its stronghold on the market for Intelcompatible PC operating systems into a position of power in other markets, such as the market for handheld computer operating systems or Web services. See supra Part III.B.3.d. In many respects, the concerns raised by Plaintiffs resemble allegations or predictions that Microsoft will attempt to monopolize these new markets or allegations that Microsoft is attempting to leverage its power in the market for Intelcompatible PC operating systems to obtain a competitive advantage in a secondary market.*fn55 Without addressing the validity of any such assertion, the Court observes that the concerns raised by Plaintiffs and their witnesses relevant to other markets are largely unconnected to the specific facts for which Microsoft has been found liable and, therefore, are more appropriately addressed as separate claims, in a separate suit, should Microsoft engage in such conduct and should Plaintiffs deem it appropriate to file one. Though it is plainly tempting to view this case as a means by which to curtail Microsoft's competitive conduct in a wide array of new markets, antitrust law does not authorize this Court to regulate the conduct of an antitrust violator in areas bearing little relation to the violation. See Zenith Radio, 395 U.S. at 133, 89 S.Ct. 1562. In order to include remedy provisions addressing Web services and handheld devices, Plaintiffs must satisfy a minimum threshold: "The test is whether or not the required action reasonably tends to dissipate restraints and prevent evasions." Bausch & Lomb, 321 U.S. at 726, 64 S.Ct. 805. In short, the Court determines that, remedy provisions crafted to address Web services and handheld devices do not satisfy this test.

The Court's determination that Web services are not appropriately addressed by the remedy renders irrelevant a wide array of testimony regarding server-to-server interoperation and server-to-non-PC device interoperation. Similarly, the Court's determination that handheld devices are not appropriately addressed by the remedy renders irrelevant significant portions of testimony relating to interoperation between such devices and PCs or servers. Accordingly, to the extent that Plaintiffs presented testimony on these subjects, the Court concludes that the testimony is not relevant to the issue of a remedy in this case and, therefore, declines to address this testimony.

5. Middleware

The Court returns at last to the discus sion of "middleware" which prompted the Court's examination of the new technologies identified by Plaintiffs. In summary form, Plaintiffs argue that the vast expansion of "middleware" to include the tech nologies discussed above is demanded by the fact that the PC ecosystem, meaning generally the combination of PC hardware and software products, has changed significantly since the events of the mid-1990s that gave rise to liability in this case and continues to change. See generally Pl. Opp'n to Def. Mot. in Limine to Exclude Testimony on Products Unrelated to the Limited Ground of Liability Upheld by the Ct. of Appeals; Pl. Supp. Mem. in Opp'n to Def. Mot. in Limine to Exclude Testimony on Products Unrelated to the Limited Ground of Liability Upheld by the Ct. of Appeals. Because of this constant, fast-paced evolution, Plaintiffs contend that the remedy the Court imposes must reach beyond the "middleware threats" to the Windows monopoly of the liability era and search for new "platform threats." Conversely, Microsoft objects to the expansion of protection to these technologies, in part, on the grounds that Plaintiffs have failed to articulate any theory which forms a nexus between these technologies and the restoration of competition in the relevant market. See generally Def. Mot. in Limine to Exclude Testimony on Products Unrelated to the Limited Ground of Liability Upheld by the Ct. of Appeals; Def. Mot. in Limine to Exclude Testimony About Events That Allegedly Occurred Before June 24, 1999. Having considered these arguments, the Court concludes that Plaintiffs' treatment of middleware is flawed and, therefore, must be rejected. Concordantly, the Court determines to adopt Microsoft's treatment of middleware for use in the Court's order of remedy.

Undoubtedly, an effective remedy must be sufficiently forward-looking to extend beyond the specific middleware threats addressed during the liability phase, such that Microsoft cannot simply repeat the same conduct with respect to other existing and similar categories of middleware functionality and even to categories of middleware functionality which have not yet been conceived. Zenith Radio, 395 U.S. at 132-33, 89 S.Ct. 1562. Notwithstanding the need and appropriateness of a forward-looking remedy, the Court treats every expansion of protection with great caution and makes every attempt to craft a remedy which is no more expansive than necessary. See Bausch & Lomb, 321 U.S. at 728, 64 S.Ct. 805. As elaborated in detail supra, it is clear that Plaintiffs seek to treat as "middleware" a wide variety of technologies to which the relationship of liability in this case is either remote or nonexistent. Although Plaintiffs have argued that such technologies are merely the most nascent "middleware platform threats," the Court finds that most of these technologies are fundamentally different from the "middleware threats" that have been discussed previously in this case.

Even where Plaintiffs' definitions of "middleware" and "Microsoft Middleware Product" are more specific in identifying software according to its functionality or brand name, rather than by the fact that it exposes APIs, Plaintiffs have included functionality in the definition which is sufficiently distinguishable from the middleware threats addressed during the liability phase such that these software products are not properly treated as "the same or similar" to the products addressed during the liability phase. See supra Parts III. B.2.a-b, III.B.3, III.C.1-4. For the vast majority of the software technologies identified in Plaintiffs' definitions of "middleware" and "Microsoft Middleware Product," Plaintiffs fail to offer evidence which the Court deems sufficient to support a conclusion that these technologies have the potential to evolve into platforms for other applications in a manner akin or equivalent to that possessed by Navigator and Java. Id. Indeed, many of these technologies are patently non-nascent and have yet to show any promise of evolving into substantial platforms for other applications. Id.

In addition, Plaintiffs include as "Microsoft Middleware Products" software which has never been included or "integrated" into Microsoft's PC operating system products. Id. Inclusion of a particular functionality in Windows is integral to the theory of liability, because it was this inclusion of middleware functionality in its Windows products in a manner that worked to the absolute exclusion of competing non-Microsoft middleware*fn57 that gave rise to significant portions of liability in this case.*fn58 For both Navigator and Sun's Java, Microsoft developed its own implementation or version of the technology, namely IE and the Microsoft JVM. Microsoft's "campaign" against Navigator and Java included the bolstering of its own versions of these technologies to the exclusion of Navigator and Sun's Java. See Microsoft, 253 F.3d at 59-78. Far from a mere technicality, Microsoft software which has never been incorporated or "integrated" into Microsoft's operating system products warrants exclusion from treatment as the Microsoft counterpart to third-party middleware threats in the context of this remedy.

Beyond inaccurately reflecting the definition of "middleware" utilized in the liability phase, Plaintiffs' definition is vague and ambiguous, rendering compliance with the terms of Plaintiffs' remedy which are reliant upon this definition to be largely unenforceable. See supra Part III.B.2.b. Therefore, this aspect of Plaintiffs' "middleware" definition is at odds with precedent on the subject of antitrust remedies, see Int'l Salt, 332 U.S. at 400, 68 S.Ct. 12, and the law of remedies in general. Fed.R.Civ.P. 65(d); Atiyeh v. Capps, 449 U.S. 1312, 1317, 101 S.Ct. 829, 66 L.Ed.2d 785 (1981).

In sum, the Court finds that Plaintiffs' "middleware" definition, though a remarkable feat of semantic gymnastics, does not reflect accurately the use of that term throughout the earlier portion of this proceeding and includes products and technologies which are readily distinguishable from the middleware addressed earlier in this case. See supra Parts III.B.2.a-b, III.B.3, III.C.1-4. In essence, Plaintiffs have expanded the parameters of the defining characteristics of the middleware threat so as to include virtually any piece of software. Id. To do so in conjunction with a remedial decree impermissibly threatens to interfere with ordinary and legitimate commercial practices inherent in Microsoft's participation in the software industry. See Spectrum Sports, 506 U.S. at 458, 113 S.Ct. 884; Bausch & Lomb, 321 U.S. at 728, 64 S.Ct. 805. In addition, as Plaintiffs have included a great amount of software in their definition which has not been shown to possess the capability of serving as a "platform," there is no basis upon which the Court can conclude that remedial assistance for this wide array of software will lower the applications barrier to entry into the PC operating system market. Absent evidence that a remedy which addresses non-platform software will facilitate competition in the monopolized market, the Court sees little justification for inclusion of such software within the scope of the remedy. Ford Motor Co., 405 U.S. at 573, 92 S.Ct. 1142. The Court, therefore, declines to use Plaintiffs' definition of "middleware" and the definitions related thereto in the remedial decree.

Conversely, the Court finds that the treatment of middleware and the related definitions in Microsoft's proposed remedy more closely reflect the meaning given to the term from the inception of this proceeding. Microsoft's treatment of middleware appropriately expands beyond the specific middleware addressed during the liability phase to address new potential platform threats which possess many of the defining characteristics of the middleware identified by Judge Jackson. See supra Part III.B.2.a. Accordingly, Microsoft's treatment of middleware, as addressed in its definitions of "Non-Microsoft Middleware" and "Non-Microsoft Middleware Product," as well as in its definitions of "Microsoft Middleware" and "Microsoft Middleware Product," accords with the notion that the remedial decree "is not limited to prohibition of the proven means by which the evil was accomplished, but may range broadly through practices connected with acts actually found to be illegal." Gypsum, 340 U.S. at 88-89, 71 S.Ct. 160. The Court's remedial decree reflects this determination, adopting the treatment of middleware advanced by Microsoft in its remedy proposal. See supra Part III.B.2.a.

The Court also notes that, to the extent that interactive television software can be proven, in the future, to have been ported from TV set-top boxes to run on a Microsoft PC operating system and expose a range of functionality to ISVs through published APIs, such technology would be included automatically in a number of the Court's remedy provisions.

D. Alleged "Bad" Acts by Microsoft

Throughout this phase of the proceeding, Plaintiffs have recited for the Court's benefit countless findings of fact entered by Judge Jackson during the liability phase regarding actions taken by Microsoft. These findings recount various actions taken by Microsoft which can be characterized as improper or unsavory in one respect or another and, at the very least, harmful to its competitors. Significantly however, many of these findings were ultimately not relied upon by the district court in conjunction with the imposition of liability for violation of § 2 of the Sherman Act. Concordantly, in its review of the district court's liability findings, the appellate court did not have occasion to rely upon the vast majority of factual findings entered by the district court, but not cited by the district court as a basis for § 2 liability. These factual findings, abundant and damning as they appear, have not, in fact, been weighed for competitive and anticompetitive effect. It has never been the contention of the parties that, during this remedy phase of the proceeding, the Court should undertake such a balancing of anticompetitive effect and procompetitive justification with regard to these factual findings. As a result, these factual findings, standing alone and unconnected to specific liability findings, cannot be utilized to justify specific remedial provisions.

It is tempting, as Plaintiffs' Proposed Findings of Fact illustrate, to rely upon the multiple accounts in Judge Jackson's Findings of Fact of Microsoft conduct that is harmful to its competitors, malicious, and severe, in order to justify the imposition of an equally severe remedy in this case. Such reliance, however, ignores the careful admonition of the appellate court that this conduct cannot be condemned as exclusionary, even where the intent behind it is anticompetitive, unless there has been a showing that the "monopolist's conduct on balance harms competition." Microsoft, 253 F.3d at 59. As the appellate court observed, "[e]ven an act of pure malice by one business competitor against another does not, without more, state a claim under the federal antitrust laws. . . ." Id. at 58 (quoting Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 225, 113 S.Ct. 2578, 125 L.Ed.2d 168 (1993)) (quotation marks omitted). The federal antitrust laws "do not create a federal law of unfair competition or `purport to afford remedies for all torts committed by or against persons engaged in interstate commerce.'" Brooke Group Ltd., 509 U.S. at 225, 113 S.Ct. 2578 (quoting Hunt v. Crumboch, 325 U.S. 821, 826, 65 S.Ct. 1545, 89 L.Ed. 1954 (1945)). Harm to "one or more competitors," however severe, is not condemned by the Sherman Act in the absence of harm to the competitive process and thereby harm to consumers. Microsoft, 253 F.3d at 58 (emphasis omitted).

The fact that Judge Jackson entered factual findings in the context of an antitrust suit is itself not sufficient to justify addressing with a remedy the conduct described in these findings. "Whether any particular act of a monopolist is exclusionary, rather than merely a form of vigorous competition, can be difficult to discern. . . ." Id. Therefore, because no court has yet found that the acts identified in the Findings of Fact, but not relied upon for the imposition of liability, visited any harm upon competition, let alone a harm which was not outweighed by the simultaneous procompetitive effect, this Court cannot presume that each of the acts identified in the Findings of Fact merits consideration equal with those acts which were found to be anticompetitive in violation of § 2, nor that these acts merit any special weight.

In addition to Plaintiffs' reliance upon the portions of Judge Jackson's Findings of Fact in justifying the imposition of certain conduct restrictions upon Microsoft, Plaintiffs identify a number of new and, for lack of a better term, allegedly "bad" acts taken by Microsoft both prior and subsequent to the imposition of liability. Plaintiffs insist that they do not intend these "bad" acts to be viewed by the Court as new allegations of anticompetitive conduct. Rather, Plaintiffs offer these new examples as evidence of conduct which is similar to or a continuation of conduct identified during the liability phase of this proceeding. In some instances, Plaintiffs attempt to relate the new conduct to that which gave rise to the findings of liability in this case. However, in most instances, Plaintiffs relate this more recent conduct to conduct discussed by Judge Jackson in his Findings of Fact, but unaddressed in terms of liability. The Court, throughout this opinion, examines various examples of Microsoft conduct identified by Plaintiffs in order to determine whether it is sufficiently related to the liability imposed by the appellate court to justify consideration by this Court in conjunction with the crafting of a remedy. Notwithstanding this approach, because Plaintiffs identify an elaborate series of new "bad" acts by Microsoft relating to Microsoft's alteration and extension of industry standards, use of proprietary technology, disclosure of technical information, or lack thereof, and the ensuing effect of all of this conduct upon interoperability in the context of server/network computing, the Court will address these acts en masse. After reviewing the evidence in this regard, the Court concludes that the alleged "bad" acts are tenuously related to the liability findings and, therefore, are of little use in crafting a remedy.

1. Findings of Fact-Allegedly New "Bad" Acts Relating to Interoperation

a. Kerberos

Kerberos is a security protocol that provides a mechanism for "authenticating" a user to a computing network. Short ¶ 67; Tr. at 5515 (Short); Tr. at 5831-32 (Madnick). Authentication is the process by which a server determines whether a client computer should be permitted to access the network (i.e., whether the user is who he/she says he/she is). Short ¶ 67; Tiemann ¶ 159; Tr. at 5515 (Short). Authentication is usually accomplished by the user entering a User ID and a password. Ledbetter ¶ 52; Short ¶ 67.

Authorization is a separate process by which a server determines whether a client computer is entitled to use a particular network resource (i.e., which files on the network the user can access). Ledbetter ¶ 52; Shapiro ¶ 179; Short ¶ 68; Tiemann 1 159. Authorization usually takes place after the user has successfully completed authentication. Ledbetter ¶ 52; Shapiro ¶ 179. The Kerberos specification does not address how users are authorized to access network resources. Short ¶ 68.

When Microsoft implemented the Kerberos protocol, it added Windows-specific authorization data (in the form of a Privilege Access Certificate or "PAC") in the "Authorization Data" field of Kerberos "tickets." Short ¶ 72. This addition permits the same Kerberos ticket to contain both authentication and authorization information. Short ¶ 72. The addition constitutes a proprietary extension of the otherwise open standard, and thus, the extension cannot be utilized by third parties unless Microsoft discloses the extension. As a result, a non-Windows client interoperating with a Microsoft server cannot make use of all of the same authorization services as a Microsoft Windows client interoperating with a Microsoft server. Tr. at 5833-36 (Madnick).

It is undisputed that Microsoft's proprietary extension of the Kerberos open standard is not technically inconsistent with the open standard, because a portion of the open standard was left "undefined," with the expectation that software developers could use the field to extend the open standard to support their particular implementations. Tiemann ¶¶ 161-62; accord Madnick ¶ 105. Microsoft's extension fulfills this expectation, but because Microsoft did not disclose its extension, Plaintiffs' witnesses complained that the extension violated the "spirit" of the open standard. See, e.g., Tiemann ¶ 162.

Microsoft presents testimony that Plaintiffs' complaints with regard to the undisclosed portions of Microsoft's Kerberos extension should have been resolved by Microsoft's February 2002 submission regarding the Kerberos extension to the Internet Engineering Task Force ("IETF"), a major standards-setting body. Madnick ¶ 102; Short ¶ 74; Tr. at 5519-20 (Short). Despite this testimony, on behalf of Plaintiffs, Michael Tiemann, Chief Technology Officer of Red Hat, Inc., Tiemann ¶ 1, questioned the adequacy of the submission and argued that the issue is unresolved. Mr. Tiemann did not offer any evidence of the inadequacy of Microsoft's recent submission to the IETF and concedes that his doubts are speculative and hastily formed. See id. ¶¶ 165-66.

b. CIFS

In the early part of the last decade, Microsoft developed for use with Windows a protocol called SMB used for file and print sharing. SMB was a proprietary protocol which, as long as it remained undisclosed, could only be used by Microsoft. Tiemann ¶ 136. Microsoft then developed as a subset of SMB the "Common Internet File System" ("CIFS") protocol, which is a file access protocol for use over the Internet that enables groups of users to share documents securely across the Internet or within corporate intranets. Short ¶ 80. Eventually, third-party developers reverse engineered portions of the SMB and CIFS protocols, creating SAMBA, an opensource implementation*fn59 of the protocols that enables non-Microsoft servers to perform file and print sharing functions with Microsoft server and client operating systems. Tiemann ¶ 137; Short ¶ 83. Mr. Tiemann alleged that the proprietary nature of the SMB and CIFS protocols hinder interoperability between a Windows client and a Linux server. Tiemann ¶ 136. Though he conceded that the SAMBA project has enabled some interoperability, Mr. Tiemann noted that such reverse-engineered solutions are effective only until Microsoft chooses to alter the technology. Id. ¶ 141. Mr. Tiemann contended that "Microsoft's implementation of SMB and then CIFS was designed to defeat interoperability and protect its desktop operating system monopoly." Id. ¶ 142. Microsoft did not offer any evidence which explains its conduct with regard to CIFS and SMB. Robert Short, Vice President for Windows Core Technology at Microsoft, Short ¶ 1, testified, however, that Microsoft has, or will license the CIFS and SMB protocols pursuant to Microsoft's settlement agreement with the United States.*fn60 Id. ¶ 84.

c. Directory Services, LDAP, ADSI

Server operating systems must have some type of directory to keep track of information about the network. Madnick ¶ 113; Short ¶ 88. A full-featured directory stores information about users, organizations, sites, systems, applications, files, printers and almost any other object that can exist in a computing network. Short ¶ 88; see also Ledbetter ¶ 51. "Active Directory" is the name given to the directory included in the Windows 2000 Server operating system. Bennett ¶ 198; Madnick ¶ 114; Short ¶ 88. Server operating systems produced by other software companies have similar directories, including eDirectory in Novell NetWare, iPlanet Directory Server in Sun Solaris, and Secure-Way Directory in IBM AIX. Madnick ¶ 114; Short ¶ 88; Tr. at 1497-98 (Ledbetter).

The Lightweight Directory Access Protocol ("LDAP") is an industry standard protocol for directory services. Tiemann 151; Bennett ¶ 198; Short ¶ 89. The Active Directory Service Interfaces ("ADSI") are a set of interfaces that any software program running on different versions of Windows 2000 or on Windows XP Professional can use to access multiple directory services in addition to Active Directory. Short ¶ 90. Mr. Tiemann alleges that Microsoft's ADSI constitutes a proprietary extension of LDAP that remains undisclosed and undocumented. Tiemann ¶ 152. Mr. Tiemann therefore asserts that "Microsoft's extension of LDAP in Active Directory puts his firm, Red Hat, at a competitive disadvantage vis-à-vis Microsoft's offerings, not because Red Hat engineers are not capable of providing competing functionality, but because of a lack of disclosure that renders them unable to communicate that functionality to Microsoft clients and servers under the ADSI protocol." Tiemann ¶ 153. On behalf of Microsoft, Mr. Short disputes Mr. Tiemann's assertion that LDAP is undisclosed and contends instead that the protocol is fully disclosed and documented on the Microsoft Developer Network ("MSDN"). Short ¶ 91.

d. TDS

The SQL server is Microsoft's database server. Tiemann ¶ 143. The Tabular Data Stream protocol ("TDS") is a proprietary, undocumented protocol that Microsoft uses to communicate between Microsoft desktop PCs and SQL servers. Id. TDS enables various Microsoft applications such as Office to view and access the data stored in a SQL server. Id. Like CIFS, TDS has largely been reverse engineered, but there remain portions which have not yet been reverse engineered. Id. ¶ 144. Mr. Tiemann alleges that without a full implementation of TDS, Red Hat is unable to provide applications that would allow Linux*fn61 clients to access information stored on Microsoft's SQL servers or to allow Linux servers to interoperate in a certain manner in a SQL server network. Tiemann ¶¶ 143-44. One of Microsoft's computer science experts, Dr. John Bennett, a professor in the Departments of Computer Science and Electrical and Computer Engineering at the University of Colorado at Boulder, Bennett ¶ 1, does not directly dispute the allegation that Microsoft has not disclosed TDS for third party use. Id. ¶ 194; Tr. at 7150-54 (Bennett). Dr. Bennett avoids the point with the assertion that there exists a reverse-engineered product, referenced by Mr. Tiemann, Tiemann ¶ 144, which makes some of the TDS functionality available for use by non-Microsoft PC clients when interoperating with Microsoft's SQL server. Bennett ¶ 194; Tr. at 7150-54 (Bennett). Dr. Bennett further observes that the product at issue is a "server application, not even an operating system." Bennett ¶ 194.

e. MAPI

MAPI is a protocol designed by Microsoft and used for communication between the Microsoft Outlook client and the Microsoft Exchange server. Bennett ¶ 157. Plaintiffs' witnesses identified MAPI as the industry standard for "server-based messaging system software." Ledbetter ¶ 83. Since widespread use of MAPI was adopted, Microsoft has extended the standard and maintains proprietary, undisclosed portions of the MAPI protocol. Bennett ¶ 159; Ledbetter ¶ 84; Tiemann ¶ 147. As a result, there are some functions that non-Microsoft servers cannot provide because of an inability to communicate through the MAPI protocol with a Microsoft Outlook client. Tiemann ¶¶ 1 148-49. Mr. Tiemann maintains that this inability to interoperate is the goal of Microsoft's proprietary extension. Tiemann ¶ 149. Although Microsoft, through Dr. Bennett's testimony, concedes its reluctance to disclose certain information, Microsoft maintains that its implementation of MAPI is an innovation like any other, which enables the company to "distinguish its products from those of its competitors." Bennett ¶ 159.

f. MUP

Dr. Ledbetter suggested that Microsoft intentionally designed the MUP modifications to create a result detrimental to Novell. Tr. at 1795-97 (Ledbetter). On behalf of Microsoft, Mr. Short responded that such an implication is without basis. Short ¶¶ 99-101. Dr. Bennett further noted that the problem described by Dr. Ledbetter was not limited to non-Microsoft software and that similar delays could be experienced by Microsoft network service providers. Bennett ¶¶ 164-65. Microsoft appears to have fully resolved the MUP problem with the release of Windows NT 4.0 Service Pack 4.0 in September of 1998. Bennett ¶ 165; see also Tr. at 1799 (Ledbetter).

In general, Microsoft denies that it ever seeks to frustrate interoperability by using proprietary technologies and standards, rather than industry standards, to disadvantage competitors. Instead, Microsoft insists that because it, like any firm, has some limitation on its resources, its decisions regarding interoperability merely reflect its decisions regarding resource allocation. In this regard, Microsoft contends that it does not intend to make technology incompatible, but that such outcomes may result from Microsoft's allocation of its own resources in response to the demands of the market. Tr. at 4559 (Gates).

2. Old "Bad" Acts Relating to Interoperation

In a similar vein, Plaintiffs point to specific factual findings entered by Judge Jackson regarding other "bad" acts in relation to Microsoft's disclosure of technical information. For example, Plaintiffs direct the Court to Findings of Fact ¶¶ 90-91, wherein Judge Jackson found that Microsoft knowingly withheld "critical technical information" from Netscape, hindering Navigator's ability to interoperate with Windows 95. Id. ¶ 90. Judge Jackson also found that Microsoft withheld "a scripting tool that Netscape needed to make its browser compatible with certain dial-up ISPs." Findings of Fact. 92. Lastly, Plaintiffs direct the Court to Findings of Fact ¶ 129 in which Judge Jackson recounted that Microsoft offered IBM early access to its source code, a blandishment enjoyed by a handful of other OEMs, on the condition that IBM pre-install Microsoft's applications in place of competing applications. Id. ¶ 129. From these acts, Plaintiffs assert that "Microsoft has used the timing of disclosure of technical information needed to interoperate with the Windows platform for the purpose of directly disadvantaging its platform rival Netscape." Pl. Prop. Findings of Fact ¶ 588. Judge Jackson did not ascribe any liability for the above-described acts. See Microsoft, 87 F. Supp.2d at 34.

3. Conclusions Regarding "Bad" Acts Evidence

Pointing to both new and old "bad" acts, Plaintiffs argue that Microsoft's ability to hinder interoperability must be curtailed by mandating the disclosure of vast amounts of technical information and by requiring Microsoft to continue to support "industry standards" in any instance where Microsoft has made an alteration to such a standard. Plaintiffs attempt to justify such remedial provisions by relating all of the above "bad" acts, new and old, concerning the release of technical information to the appellate court's imposition of liability. See, e.g., Pl. Prop. Findings of Fact ¶¶ 581-585, 1279. Upon review of Plaintiffs' allegations of "bad" conduct by Microsoft relating to interoperability and the liability findings in this case, the Court concludes that Plaintiffs' allegations in this area bear only a remote relationship to the liability findings. As a result, Plaintiffs' reliance upon this series of allegedly "bad" acts by Microsoft carries little weight, if any, in the Court's determination of the appropriate remedy in this case.

a. Insufficient Nexus to Java Developer Tools Deception

Seeking to link this "bad" act evidence to the liability findings in this case, Plaintiffs direct the Court to the appellate court's finding with regard to Microsoft's "software development tools . . . created to assist ISVs in designing Java applications" that Microsoft included in its "Java implementation." Microsoft, 253 F.3d at 76. These tools, like Microsoft's JVM, were incompatible with Sun's cross-platform aspirations for Java. Id. The appellate court expressly noted that such incompatibility was "no violation, to be sure," but deemed illegal Microsoft's deception of software developers regarding the Windows-specific nature of the tools. Id. at 76-77. As a result of the deception, developers who relied upon Microsoft's "public commitment to cooperate with Sun" and utilized the Microsoft Java tools unknowingly created applications that would only run on the Windows operating system. Id. at 76. Finding that the deception was no error on Microsoft's part, but instead was part of Microsoft's anticompetitive strategy to undermine cross-platform Java, and in the absence of any procompetitive justification for the action, the appellate court found Microsoft to be in violation of § 2 of the Sherman Act. Id. at 76-77.

While this was undoubtedly reprehensible behavior, of paramount significance in the Court's examination of this liability finding is the fact that the imposition of liability for Microsoft's Java tools concerned not the tools' incompatibility with cross-platform Java, but Microsoft's deceptive conduct. Id. The Court, therefore, rejects Plaintiffs' suggestion that the imposition of liability for Microsoft's deception regarding its Java developer tools in any way condemns Microsoft's decisions to depart from industry standards or to utilize a proprietary standard in the absence of deception regarding the departure. See supra Part III.D.1. The Court further observes that Plaintiffs' allegations regarding Microsoft's alteration of industry standards and use of proprietary technology more closely resemble conduct for which the appellate court expressly rejected liability, than conduct condemned by the appellate court. Id. In particular, the actions about which Plaintiffs complain are not unlike Microsoft's implementation of its own JVM incompatible with Sun's JVM. Compare id., with Microsoft, 253 F.3d at 74-75. Microsoft proffered a procompetitive justification for its development of an incompatible JVM, which was found to outweigh the anticompetitive effect of the implementation. Microsoft, 253 F.3d at 7475. Similarly, Microsoft's inclusion of its own Java runtime in every copy of Windows so as to ensure ubiquity also was found not to violate the antitrust laws. Id. at 75.

Just as "a monopolist does not violate the antitrust laws simply by developing a product that is incompatible with those of its rivals," id., little, if anything, in the liability findings of this case could be construed to indicate that, as a general rule, a monopolist's decision to alter industry standards or implement a proprietary version of such standards in its own product or technology, without more, violates the antitrust laws. This Court undoubtedly has the discretion to "uproot all parts of an illegal scheme-the valid as well as the invalid-in order to rid the trade or commerce of all taint of the [illegal conduct]." Paramount Pictures, 334 U.S. at 148, 68 S.Ct. 915. Still, "[i]n resolving doubts as to the desirability of including provisions designed to restore future freedom of trade," this Court is instructed to weigh the "circumstances under which the illegal acts occur." Gypsum, 340 U.S. at 89, 71 S.Ct. 160.

In this instance, the appellate court was very clear as to which portions of Microsoft's conduct were anticompetitive in their effect so as to violate the antitrust laws and which portions of Microsoft's conduct were rendered legitimate by a procompetitive justification. This Court cannot ignore the careful and nuanced distinctions drawn by the appellate court in order to justify the prohibition of conduct which bears only a limited resemblance to a narrow part of an anticompetitive scheme. As a result, the Court finds Plaintiffs' focus on Microsoft's alteration of industry standards and reliance upon undisclosed proprietary technologies to be largely misplaced. Plaintiffs' focus ignores the totality of the circumstances, and it ventures into areas of conduct which, at best, are only tangentially related to the conduct for which Microsoft has been found liable.

b. Insufficient Nexus to First Wave Agreements

Plaintiffs also focus, in this context, upon Microsoft's treatment of technical information in conjunction with the First Wave Agreements it entered into with various ISVs. In this context, Microsoft was found to have provided preferential technical support and conditioned receipt of technical information in exchange for ISV promises to promote exclusively the Microsoft JVM and IE. Microsoft, 253 F.3d at 71-72 (discussing Microsoft's First Wave Agreements with ISVs regarding the use of IE); id. at 75-76 (discussing Microsoft's First Wave Agreements with ISVs regarding Microsoft's JVM). In relation to both the Microsoft JVM and IE, the First Wave Agreements were deemed to violate the Sherman Act inasmuch as they effectively excluded the Sun-compliant JVM and Navigator from significant channels of distribution. Id. at 72, 75-76. Importantly, however, the appellate court expressly noted that the mere fact that Microsoft exchanged "costly technical support and other blandishments" in conjunction with the agreements was not a basis for the imposition of liability. Id. at 75 (quoting Findings of Fact ¶ 401); see also id. at 71-72 (describing Microsoft's use of "preferential support" and "technical information" as consideration). Rather, it was the exclusive effect of the agreements which led to the imposition of liability for Microsoft's First Wave Agreements with ISVs. Id. at 71-72, 75-76.

Although "[e]quity has power to eradicate the evils of a condemned scheme by prohibition of the use of admittedly valid parts of an invalid whole," Bausch & Lomb, 321 U.S. at 724, 64 S.Ct. 805; see also Paramount Pictures, 334 U.S. at 148, 68 S.Ct. 915, Plaintiffs' focus on an entirely separate series of alleged withholdings of proprietary technical information unrelated to any exclusive deals with ISVs, far exceeds mere eradication of Microsoft's practice of promising technical information and other blandishments in conjunction with the First Wave Agreements. Compare supra Part III.D.1-2, with Microsoft, 253 F.3d at 58. The Court, therefore, does not regard the alleged withholding of technical information described in Plaintiffs' most recent allegations as synonymous with the anticompetitive conduct, or any part thereof, addressed by the appellate court in conjunction with its review of the First Wave Agreements, On the same grounds, the Court rejects the view that such alleged withholding of information be viewed as a mere continuation of conduct found in whole or in part to violate the antitrust laws.

c. Nexus to Old "Bad" Acts

At best, some of the allegedly new "bad" acts described above bear a limited similarity to the series of old "bad" acts from the liability phase because they concern the withholding of technical information. See supra Part III.D.1. Despite this limited similarity, Plaintiffs' allegations are not relevant to this phase of the litigation. Plaintiffs do not argue, nor does it appear, that these "old" bad acts gave rise to any findings of liability against Microsoft for violations of antitrust law. While the factual findings of old "bad" acts identified by Plaintiffs are not benign acts by Microsoft, they were not found to violate the Sherman Act. There is no need to "remedy" conduct for which no liability was ascribed, nor is there a need to "remedy" new conduct which bears a mere tangential similarity to such previously identified conduct.

Despite Plaintiffs' protestations to the contrary, the Court finds that Plaintiffs' allegations with regard to Microsoft's conduct in the area of interoperability are, at their core, new allegations of anticompetitive conduct. See id. Notwithstanding the Court's authority to exceed the parameters of the precise conduct found to violate the antitrust laws in order to ensure an effective remedy, there is no dispute that the Court is not at liberty to remedy new "bad" conduct for which no liability has been ascribed. See Microsoft, 56 F.3d at 1460; see also Yamaha Motor Co. v. FTC, 657 F.2d 971, 984 (8th Cir. 1981) (rejecting injunction on the ground that its provisions extended "beyond any reasonable relationship to the violations found"). The parties have agreed throughout this proceeding that it would be inappropriate now, during the remedy phase of this proceeding, for the Court to consider and evaluate for anticompetitive effect new allegations against Microsoft. Accordingly, the Court finds that Plaintiffs' new allegations of "bad" conduct relating generally to interoperation and more specifically, to Microsoft's alteration of industry standards, use of proprietary technology, and nondisclosure of technical information, are inapposite to the narrow task at hand.

E. Causation Analysis

1. Microsoft's Simple Injunction Argument

Inasmuch as Plaintiffs seek to expand the scope of the conduct to be addressed by the remedy in this case, Microsoft has sought to narrow the scope. In this regard, Microsoft contends that, if Plaintiffs are entitled to any remedy,*fn62 they are entitled to no more than a simple proscription against the offensive conduct. To justify its argument in this regard, Microsoft relies upon the appellate court's determination that "[i]n devising an appropriate remedy, the District Court also should consider whether plaintiffs have established a sufficient causal connection between Microsoft's anticompetitive conduct and its dominant position in the OS market." Microsoft, 253 F.3d at 106. The appellate court further observed that "[a]bsent such causation, the antitrust defendant's unlawful behavior should be remedied by `an injunction against the continuation of that conduct.'" Id. (quoting 3 AREEDA & HOVENKAMP, ANTITRUST LAW ¶ 650a, at 67). Drawing from this language, Microsoft insists that:

Establishing a causal connection sufficient to justify more than an injunction against the 12 acts the Court of Appeals found anticompetitive would require each of the following:
1. Proof that Navigator and Java would have been successful software products that would have achieved near ubiquitous distribution absent the 12 Microsoft acts found to be anticompetitive.
2. Proof that Navigator and Java then would have evolved into alternative software development platforms for general purpose applications.
3. Proof that so many applications would have been written to run on Navigator and Java (as opposed to running directly on Windows) that the applications barrier to entry into the market for Intel-compatible PC operating systems would have been significantly reduced.
4. Proof that once the applications barrier to entry had been significantly reduced, other vendors would have entered the market for Intelcompatible PC operating systems and thereby eliminated Microsoft's monopoly.

Microsoft Prop. Concl. of Law ¶ 109. In so arguing, Microsoft demands of Plaintiffs precisely what the appellate court deemed to be largely unattainable. The appellate court stated without equivocation that "neither plaintiffs nor the court can confidently reconstruct a product's hypothetical technological development in a world absent the defendant's exclusionary conduct." Microsoft, 253 F.3d at 79. Moreover, the district court had already determined as a factual matter that there was "insufficient evidence to find that, absent Microsoft's actions, Navigator and Java already would have ignited genuine competition in the market for Intel-compatible PC operating systems." Findings of Fact ¶ 411. The appellate court was well aware of this finding, Microsoft, 253 F.3d at 107 (quoting Findings of Fact ¶ 411), and did not indicate that Plaintiffs must overcome it in order to obtain a remedy exceeding a mere proscription of the illegal conduct.

In addition, Microsoft's arguments relating to causation overlook the context of the appellate court's analysis. Throughout its discussion of causation, the appellate court addressed the level of causation that must be established in order to justify a remedy of divestiture. Id. at 106-07. The treatise upon which the appellate court so heavily relied, Areeda and Hovenkamp's Antitrust Law, clearly distinguishes the evidence of causation which is required for a divestiture order and the evidence of causation which is sufficient for injunctive relief. Areeda and Hovenkamp advise that in cases like this one, where "a monopolist has consummated an exclusionary act . . . equitable relief beyond a mere injunction against repetition of the act is generally appropriate." 3 AREEDA & HOVENKAMP, ANTITRUST LAW ¶ 653c, at 94-95. Recognizing the possibility that "the specific act under challenge may be unique to the circumstances and unlikely to be precisely `repeated,'" and the need to "undo the various effects of the act," Areeda and Hovenkamp offer the precise advice advanced by the appellate court: the relief must be "tailored" to fit the wrong. Id.; Microsoft, 253 F.3d at 107. The treatise advises specifically that the tailoring must have "sufficient breadth to ensure that a certain `class' of acts, or acts of a certain type or having a certain effect, not be repeated." 3 AREEDA & HOVENKAMP, ANTITRUST LAW ¶ 653C, at 94-95.

Even if Microsoft were correct that a proper remedy in this case should only enjoin the specific conduct found to be anticompetitive, Microsoft overlooks the fact that any doubts as to the extent of even this narrow remedy are to be resolved against the defendant. Areeda and Hovenkamp advise that "[m]erely for purposes of enjoining the conduct itself, exclusionary conduct is best defined rather broadly in the sense of resolving against the monopolist any doubts concerning the significance of the conduct's contribution to the monopoly." Id. ¶ 653c, at 91.

Inasmuch as Microsoft has proposed a remedy which plainly exceeds the bounds of the exclusionary conduct, Microsoft concedes that the Court may order such a remedy in this case. To the extent that the Court has rejected or altered portions of Microsoft's proposed remedy, it does so, in its discretion, to ensure that the conduct found to be exclusionary in violation of § 2 of the Sherman Act is, in fact, "broadly" defined, as Areeda and Hovenkamp instruct, and thereby fully enjoined. Accordingly, the Court finds unpersuasive Microsoft's argument that Plaintiffs are entitled to no more that a simple proscription against the conduct found to violate the antitrust laws.

2. Economic Testimony

In reviewing Judge Jackson's failure to hold an evidentiary hearing prior to imposition of the IFJ, the appellate court recounted the presence of substantial factual disputes, highlighting in particular the conflicting predictions proffered by Plaintiffs' expert economists and investment banking experts and Microsoft's experts in the same areas. Microsoft, 253 F.3d at 101-02. Based upon this account and the nature of the remedy proposals, this Court anticipated that substantial portions of the testimony in this phase of the proceeding would come from witnesses qualified by the Court as experts in one field or another. Along these lines, throughout the presentation of evidence in this phase of the proceeding, the Court has been particularly attentive to the testimony of the parties' economic experts with regard to the anticipated effect of particular remedial provisions on competition in the relevant market and for consumers.

Neither of the parties has taken the position that it would be improper for the Court to impose a particular remedial provision in the absence of an endorsement of such provision from one of the economists testifying in this proceeding. Notwithstanding this fact, the Court observes that where the changes that would result from the imposition of a particular remedial provision are dramatic, there is at least an expectation that the party proposing such changes will present an economic analysis of the effect of the changes upon competition in the monopolized market, as well as upon Microsoft, other industry participants, and the consumer. Such expert testimony is of particular use to the Court because the economist is capable of examining the anticipated effect of the provision upon all segments of the industry, rather than from a single perspective, such as that which is frequently offered by individual industry participants. Although the absence of economic analysis of any given remedy provision does not, by any means, require the rejection of the proposed provision, the Court is careful to note those occasions where expert economic testimony would have been particularly useful to the Court and where its absence is significant.

a. Dr. Shapiro's Causation Analysis

i. Factual Findings

Plaintiffs' sole presentation of expert economic analysis comes from Dr. Carl Shapiro, Professor of Business Strategy at the University of California at Berkeley. Dr. Shapiro offered an analysis of the appropriate remedy in this case and, not surprisingly, endorsed many, though not all, of the provisions in Plaintiffs' proposed remedy. Shapiro ¶¶ 1-207. Dr. Shapiro testified that his economic analysis rests upon the premise and belief that "restoring competition requires remedial provisions that will affirmatively lower the barriers to entry into the market for PC operating systems." Shapiro ¶ 16 (emphasis omitted). Dr. Shapiro went on to explain that because he viewed the remedy in this case as seeking to "restore competition," the appropriate starting point is an "assessment of how Microsoft's illegal conduct harmed competition." Id. ¶ 17 (emphasis omitted).

Dr. Shapiro's "assessment" in this regard appears to have been based entirely upon his examination of the district and appellate courts opinions in this case. Id. ¶¶ 18-20, 22-23. In fact, Dr. Shapiro was unable to identify any source other than the district and appellate court opinions in this case upon which he relied to examine the effects of Microsoft's anticompetitive conduct upon the applications barrier to entry. Tr. at 3360-64 (Shapiro). In this regard, Dr. Shapiro admitted that his citation to Judge Jackson's Findings of Fact in order to illustrate the impact of Microsoft's anticompetitive conduct upon Navigator and Java included conduct which was found not to violate the antitrust laws. Id. at 3381-93 (Shapiro). Dr. Shapiro also conceded that he did not make any attempt to separate the effect of the illegal conduct from the effect of the conduct found not to be illegal. Id. at 3392, 3401. From his assessment of the record, Dr. Shapiro reached the conclusion that Microsoft's anticompetitive conduct "raised" the existing applications barrier to entry, and therefore, the remedy imposed by the Court, in Dr. Shapiro's opinion, "should lower entry barriers." Id. ¶ 25 (emphasis omitted).

Quite logically, Dr. Shapiro opined that "entry barriers should be lowered to compensate consumers for the elevation of entry barriers that has resulted from Microsoft's illegal conduct." Id. ¶ 46; see also id. ¶ 58. Dr. Shapiro readily conceded, however, a lack of any "precise measure" of the extent to which Microsoft's illegal conduct actually "raised" entry barriers. Shapiro ¶ 46. Dr. Shapiro acknowledged his inability to define or even estimate the amount, or the "quantum," to which Microsoft's conduct augmented or fortified the existing applications barrier to entry to defend against the threat posed jointly by Navigator and Java. Tr. at 3359-60 (Shapiro). Dr. Shapiro opined that this uncertainty leaves the Court with the task of making "some judgment calls . . . in terms of how far the remedy should go." Id. at 3359. Nevertheless, Dr. Shapiro offered his "best estimate of the elevation of entry barriers caused by Microsoft's illegal conduct." Shapiro ¶ 46. This "estimate" however, is little more than a rejection of the analysis of Microsoft's economic expert, Dr. Murphy, which the Court addresses below. Id. ¶¶ 61-70. Ultimately, Dr. Shapiro offered the conclusion that "[t]he impact of the illegal acts was significant at the time, while their ongoing effects are very difficult to assess." Id. ¶ 62. This "conclusion," of course, is little more than a reiteration of Dr. Shapiro's earlier determination that it is impossible to measure the extent to which Microsoft's anticompetitive conduct raised the existing barrier to entry. The Court observes, in this regard, that Dr. Shapiro does not appear have based this portion of his analysis on any additional empirical evidence or to have relied upon his own experience and expertise to assess the impact of Microsoft's illegal conduct. The remainder of Dr. Shapiro's testimony consisted largely of his assessment of the effectiveness of the two competing remedy proposals in lowering the applications barrier to entry.

ii. Conclusions

To the extent that Dr. Shapiro offered an analysis of whether Microsoft's illegal conduct raised the existing barrier to entry, that analysis is essentially a legal analysis, rather than an economic analysis. The Court reaches this conclusion because Dr. Shapiro's analysis relies entirely upon the judicial findings and conclusions entered in this case and the logical conclusions which can be drawn therefrom. See supra Part III.E.2.a.i. In conjunction with his analysis on this point, Dr. Shapiro does not appear to have gathered or synthesized empirical information or to have applied particular economic principles. Id. Likewise, Dr. Shapiro's ensuing analysis of the extent to which the remedy in this case should seek to affirmatively lower the existing barrier to entry does not appear to be based upon anything more than a logical reading of the judicial opinions in this case, as he offered no quantification to guide the Court beyond the view that the lowering of the barrier to entry should correspond roughly to the amount the barrier was raised by the illegal conduct. Id.

The Court can itself review the same judicial opinions reviewed by Dr. Shapiro and reach determinations regarding whether the remedy should seek to affirmatively lower the applications barrier to entry and the extent to which it should do so. Indeed, Dr. Shapiro himself expected as much, anticipating that the Court would exercise its judgment in deciding "how far the remedy should go." Id. Thus, the Court observes, as a preliminary matter, that Dr. Shapiro's ensuing analysis regarding the sufficiency of the two competing remedy proposals to lower the barrier to entry will be useful only to the extent that the Court agrees with Dr. Shapiro's interpretation of the appellate and district court opinions in this case.

b. Dr. Murphy's Causation Analysis

i. Factual Findings

One of Microsoft's economic experts, Dr. Kevin Murphy, Professor of Business Economics in the Graduate School of Business at the University of Chicago, provided a causation analysis from a very different perspective. Dr. Murphy concluded that Microsoft's anticompetitive conduct did not have a significant effect on Navigator, Java, or Microsoft's position in the market for Intel-compatible PC operating systems. Murphy ¶¶ 92, 104, 157. The Court finds that Dr. Murphy's conclusions as to the effect of Microsoft's conduct upon Navigator and Java are factually in conflict with the conclusions of the appellate court that gave rise to the findings of liability in this case. See Microsoft, 253 F.3d 34. Dr. Murphy's conclusion with regard to the effect of Microsoft's anticompetitive conduct upon its monopoly is less directly in conflict with the appellate court's opinion because, as that court acknowledged, a mere inference of causation, id. at 79, rather than a "clear [] indication of a significant causal connection between the conduct and creation or maintenance of the market power," would support a finding of liability, id. at 106 (emphasis in original). Still, Dr. Murphy's conclusion that the anticompetitive conduct identified in this case had no effect upon Microsoft's monopoly can be seen to undercut, if not directly contradict, the inference of causation necessary to the appellate court's imposition of liability. Although Dr. Murphy has protested any assertion that his analysis ignores, contradicts, or second-guesses the findings of the appellate court, the Court disagrees. See, e.g., Tr. at 4068 (Murphy).

ii. Conclusions

The Court harbors serious concerns as to the usefulness of Dr. Murphy's causation analysis. Most troubling to the Court in examining Dr. Murphy's analysis is the fact that many of the conclusions reached by Dr. Murphy cannot be reconciled logically with significant portions of the appellate court's opinion. See supra Part III. E.2.b.i. Based upon the Court's concerns as to the basis for Dr. Murphy's causation analysis, the Court ascribes little, if any, weight to this portion of Dr. Murphy's testimony.

Notwithstanding the foregoing conclusions regarding the expert testimony offered by both Drs. Shapiro and Murphy, the Court notes that substantial portions of testimony from both of these expert witnesses, distinct from the portions described above, prove useful to the Court in its assessment of the parties' respective remedy proposals.

IV. REMEDY-SPECIFIC CONCLUSIONS

Having rendered the foregoing preliminary determinations regarding the appropriate scope of the remedy in this case, the Court, in the exercise of its broad discretion on the subject of remedy, enters the following determination on the issue of remedy. The Court's determination is based upon the entire factual and legal record in this case and is guided, in particular, by the factual findings on the subject of remedy entered by the Court and appended hereto as Appendix A. The Court's determination as to the remedy to be imposed in this case reflects the Court's assessment of the facts and application of the relevant law, as well as the exercise of the Court's broad discretion.

A. Original Equipment Manufacturer ("OEM") Configuration Flexibility

1. Windows Licenses

The remedy imposed by the Court will provide substantial freedom to OEMs in their configuration of Microsoft's Windows operating system by lifting Microsoft's illegal license restrictions. A significant portion of the liability findings concerns Microsoft's treatment of OEMs, specifically with regard to Microsoft's imposition of exclusionary restrictions in conjunction with the Windows operating system licenses provided to OEMs. Microsoft, 253 F.3d at 60-62. The licenses sharply limited OEMs' flexibility and choices in configuring the PC desktop. The limitations were exclusionary in that they bound OEMs' configuration of the desktop in a manner which tended to favor Microsoft software and services at the expense of software and services offered by other entities. Drawing upon these liability findings, there is little dispute as to the general proposition that the remedy imposed by the Court should terminate Microsoft's illegal and anticompetitive license restrictions and prevent Microsoft from imposing similar restrictions in the future.

Despite this limited agreement that the remedy should lift Microsoft's anticompetitive OEM license restrictions, the parties differ significantly as to the specific manner in which such restrictions should be lifted, as well as the extent to which greater flexibility, beyond that addressed at the liability phase, should be secured for OEMs. The first such disagreement concerns whether the remedy in this case will provide protection from restrictions for "Third-Party Licensees." Plaintiffs argue that the lifting of the license restrictions should require Microsoft to license its Windows operating system to third parties, such as media companies or software developers, who will then distribute or otherwise use the licenses for commercial purposes. The third-party licensing portion of Plaintiffs' proposal would permit such third parties to "customize" the appearance of Windows to reflect the third party's input. See Appendix A, Part I.A.

Plaintiffs do not link this aspect of their request for a remedy to a finding of liability which concerns Microsoft's treatment of such "Third-Party Licensees." Plaintiffs argue instead that the protection of the ability of such licensees to customize Windows will increase the development and distribution opportunities for non-Microsoft middleware, aiding in unfettering the market from Microsoft's anticompetitive conduct. Plaintiffs, however, have failed to establish that such licensing will actually benefit or promote competition. See id. Additionally, Plaintiffs' proposal for thirdparty licensing does not reflect the appellate court's recognition that, to the extent that Microsoft's license restrictions prevented drastic alteration of the user interface, they did not violate the Sherman Act. Microsoft, 253 F.3d at 63. Rather, Plaintiffs' examples of third-party configuration unapologetically reflect precisely this type of a drastic alteration. See Appendix A, Part I.A. Plaintiffs' proposal in this regard will plainly limit Microsoft from engaging in conduct which has not been found to be in violation of the antitrust laws. Id.; Microsoft, 253 F.3d at 63.

While the case law permits the Court to address legitimate conduct as well as illegal conduct in order to ensure that the market is free from the effects of the anticompetitive scheme, Nat'l Soc'y of Profl Eng'rs, 435 U.S. at 698, 98 S.Ct. 1355, Plaintiffs have failed to make a showing that regulation of Microsoft's thirdparty licenses in order to enable "customization" will advance competition, see Appendix A, Part I.A. Indeed, the appellate court did not address any aspect of "thirdparty licensing" in its opinion. See Microsoft, 253 F.3d 34. In addition, the testimony offered in support of Plaintiffs' proposal raises a concern that it has been included for the benefit of particular competitors, rather than for the benefit of competition itself. See Appendix A, Part I.A. Absent a clearer connection to the imposition of liability or a clearer showing that a remedy which regulates third-party licensing will benefit competition, the Court declines to impose a remedy which extends needlessly beyond the parameters of the liability findings in order to address license restrictions which Microsoft may impose in thirdparty licenses. See Brunswick, 429 U.S. at 488, 97 S.Ct. 690 ("The antitrust laws, however, were enacted for `the protection of competition not competitors.'") (quoting Brown Shoe, 370 U.S. at 320, 82 S.Ct. 1502).

2. Installation and Display of Icons, Shortcuts, and Menu Entries

Rather than extend the terms of the decree haphazardly beyond the limits of the anticompetitive conduct as Plaintiffs suggest, the Court will tailor the remedy to fit the exigencies of this case, Int'l Salt, 332 U.S. at 400-01, 68 S.Ct. 12; see also Bausch & Lomb, 321 U.S. at 727, 64 S.Ct. 805, focusing initially upon terminating any existing practices deemed to be anticompetitive and ensuring that "there remain no practices likely to result in [illegal monopoly maintenance] in the future," United Shoe, 391 U.S. at 250, 88 S.Ct. 1496. The remedy imposed by the Court therefore seeks primarily to address the specific conduct found to be anticompetitive with regard to OEM licenses. In order to address Microsoft's illegal prohibitions in OEM licenses, the remedy in this case will afford OEMs the freedom that they have been denied and will protect against any "back door" attempt by Microsoft to deny flexibility. The remedy imposed by the Court will secure for OEMs the general ability to install and display icons, shortcuts and menu entries for middleware-the type of software disfavored by Microsoft's anticompetitive restrictions-on the Windows desktop or in the Start menu. Importantly, however, rather than a blanket prohibition on licensing restrictions, the Court's remedy recognizes the care with which the appellate court separated anticompetitive restrictions from legitimate license restrictions and attempts to reflect that separation in its terms. See generally Microsoft 253 F.3d 34.

For example, the appellate court concluded that license restrictions preventing drastic alteration of Microsoft's copyrighted work were only marginally anticompetitive and on this basis, rejected a finding of liability for licenses that prohibit OEMs from launching an alternative user interface automatically at the end of the initial boot sequence. Microsoft, 253 F.3d at 63. Given this very specific recognition that Microsoft can legitimately protect its products from drastic alteration, the remedy imposed by the Court will prohibit anticompetitive practices but still enable Microsoft to protect its copyrighted products from drastic alteration. Id. Therefore, the provisions of the injunctive decree will balance preservation of the core elements of Microsoft's product design against the need to secure significant flexibility and protection for OEM configuration of the product.

The Court first strikes this balance in the context of the installation and display of icons, menu entries, and shortcuts. Microsoft will be enjoined from restricting by agreement any OEM licensee from installing an icon, menu entry, shortcut, product, or service related to "Non-Microsoft Middleware," See supra Part III.B-C (discussing definition of "Non-Microsoft Middleware"). Likewise, the Court will enjoin Microsoft from limiting the display of any such icon. However, the Court will not prevent Microsoft from imposing non-discriminatory limitations on the specific areas in which icons may be displayed, provided that such limitations cannot be used to favor Microsoft and, instead, exist as part of the Windows product design. There is no evidence that the minor limitations on OEM flexibility in this manner will permit illegal monopolistic practices to persist or harm competition. See Appendix A, Part I.A. The Court's remedy will also permit Microsoft to protect the design of its product from drastic alteration in a manner which is the substantial equivalent of a launching of a new user interface, such as OEM designation of an icon in such an extreme size or shape that it obscures the crucial elements of the Windows user interface. There has been no showing that the preservation of Microsoft's ability to impose license restrictions with regard to these kinds of extreme alterations of Windows will work to the detriment of competition, see id., and in the Court's view, such license restrictions are more akin to the restrictions for which Microsoft was absolved of liability than those for which Microsoft was found to have acted unlawfully.

3. Insertion of Internet Access Provider ("IAP") Registration Offers

The insertion by OEMs of offers of service from IAPs during the initial boot sequence was found to provide an opportunity for the promotion of alternative middleware. Findings of Fact ¶ 210. Microsoft's limitation on the ability of OEMs to insert such offers was found to have an anticompetitive effect in violation of antitrust law. Microsoft, 253 F.3d at 61-64. To remedy this finding, the remedial decree imposed by the Court will enjoin Microsoft from imposing license restrictions on the ability of OEMs to insert such offers.

Microsoft has argued that the insertion of IAP registration sequences should be subject to the imposition of Microsoft's "reasonable technical requirements" on the rationale that such requirements preserve a consistent user experience. In offering this concern as a justification, Microsoft ignores the fact that the same rationale was rejected by the appellate court when it imposed liability for Microsoft's license restrictions regarding the initial boot sequence. Id. at 63-64. Specifically, the appellate court concluded that Microsoft's concern for consumer confusion and the allegedly reduced value of its product did not outweigh the anticompetitive effect of the license restrictions. Id. Microsoft's argument was found to have merit only to the extent that the license restrictions were necessary to prevent "drastic alteration of Microsoft's copyrighted work." Id. at 63. Microsoft has not offered any additional justification for preserving its ability to impose "reasonable technical requirements" on the introduction of IAP registration offers during the initial boot sequence. See Appendix A, Part I.A. Accordingly, there is no basis upon which the Court can rationally conclude that the remedy should permit Microsoft to impose such specifications beyond the requirement that the registration sequence must return the user to the Windows user interface at its conclusion. Id.; see also Microsoft, 253 F.3d at 63 ("We agree that a shell that automatically prevents the Windows desktop from ever being seen by the user is a drastic alteration of Microsoft's copyrighted work. . . ."). Even Microsoft concedes that, at a minimum, the final judgment in this case must address the specific acts found by the appellate court to constitute exclusionary practices in violation of § 2 of the Sherman Act. Hence, the remedy imposed by the Court will enable OEMs to offer IAP registration during the initial boot sequence.

4. Automatic Launching of Applications

In a related context, the Court's remedial order will secure the ability of OEMs to install applications which launch automatically, meaning without end-user invocation, in particular instances. Microsoft argues that the remedy imposed by the Court should not give OEMs complete autonomy with regard to the automatic launching of applications at start-up or upon accessing or departing the Internet. The Court recalls once again that the only Microsoft license restriction found to have competitive value outweighing its anticompetitive effect was the prohibition on the automatic launch of a program which replaced the Windows user interface with a substitute user interface. Microsoft, 253 F.3d at 63. The rationale for this holding rests upon the appellate court's conclusion that the "drastic alteration of Microsoft's copyrighted work" outweighed the "marginal anticompetitive effect" of the restriction. Id. By implication, therefore, the appellate court did not relieve Microsoft of liability for the imposition of license restrictions relating to the automatic launching of software where the automatically launched programs respected and functioned within the Windows user interface and thereby did not drastically alter Microsoft's copyrighted work. Compare id. at 64 ("[W]e hold that with the exception of the one restriction prohibiting automatically launched alternative interfaces, all of the OEM license restrictions at issue represent uses of Microsoft's market power to protect its monopoly. . . .") (emphasis added), with Findings of Fact ¶ 213 ("Third, Microsoft prohibited OEMs from installing programs, including [but not limited to] alternatives to the Windows desktop user interface, which would launch automatically upon completion of the initial Windows boot sequence.").

Paying careful attention to the very specific reason for the appellate court's rejection of liability with regard to alternative user interfaces, the Court regards it as appropriate for the remedy in this case to permit the automatic launch of non-Microsoft programs upon the completion of the initial boot sequence where the automatically-launched program does not substitute the Windows user interface for a different interface or otherwise drastically alter Microsoft's copyrighted work. See Appendix A, Part I.A (describing programs that are automatically launched but do not replace Microsoft's user interface). The Court has tailored its remedy to permit the automatic launch of such programs because the ability to launch programs automatically will assist in the promotion ...


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